The Terrifying Political Economy of Waiting

By Nathan Tankus, a student and research assistant at the University of Ottawa. You can follow him on Twitter at @NathanTankus

While most people did not recognize it at the time, the financial crisis really began in 2007. By mid to late 2008, events seemed to be moving blindingly fast. The public and popular media woke up to the significance of what was before an insular event that a relatively small group of people had been analyzing.

Since then many people, including the writers of this blog, have been watching events intensely. It is common among these critical observers to think (and to have thought) that the semblance of stability that was brought about by early 2009 couldn’t be sustained, either domestically or internationally. I think this reasoning is correct. However that thought in and of itself doesn’t tell us when things will fall apart. For over four years now, we’ve watched as our oligarchs played this dangerous balancing act, staying just one inch away from disaster.

The terrifying thing is, it’s quite possible they can keep this going for a while longer. Cyprus may signal a death blow to the Euro, it may even signal a quick unraveling. Or it could be another Dubai World, an event that seemed to signal a major turning point but now seems like a momentary blip on the radar (not to say it isn’t important. Yves’s initial hypothesis that the untested nature of the Islamic bond market will be a major problem ahead could well be proven correct).

Policymakers have a lot of firepower they can deploy in response to nasty surprises. No matter how many mistakes they make, short of major popular resistance, complete collapse can often be prevented. That’s the nature of oligarchic power. No matter how late in the process it is, resources can always be mustered in an effort to patch up problems. When you get representatives from all the relevant organizations in a room on very short notice, as we’ve seen with the rolling Eurozone crisis, the ability to put a quick fix in place impedes dealing with the underlying issues. For instance, Wolfgang Munchau of the Financial Times has argued that the success of the OMT has actually worsened the banking crisis. By ameliorating the most pressing symptoms of the crisis, that of widening government bond yields in weaker countries, it protected key interests while dulling the political impetus to attack the issue more fundamentally.

Moreover, the authorities’ emergency responses can make the underlying situation worse. Our modern world is a complex, interconnected system, and stopping a leak at one point often just increases the pressure elsewhere. Moreover, it doesn’t remove the ill effects of the problems that have been set into motion. The weekend meeting at the Federal Reserve immortalized in Too Big To Fail wasn’t exactly for the common man. So it isn’t surprising that the top 1% has showed strong income gains since 2009 while everyone else, on the whole, is worse off.

This is maddening for those of us on the outside, because it means we have to carefully watch every change and tear our hair out hoping for a half decent resolution while being driven crazy by the stupidity/evil of decision makers (in some ways Bush was telling a profound truth when he declared he was the “decider”). Further, it’s terrible politically because as the core elements of mainstream political parties continually fail to respond to the growing rot, the extremists gain influence and power because they are willing to offer solutions, or even acknowledge something is wrong. Further, the lingering feeling the population shares that the crisis isn’t over is very useful for preventing needed reforms. Yves has aptly described how “too big to fail” is really banks holding a guns to their own heads and saying “do what I say or we’ll shoot”. What has gotten less (but not no) comment is that banks (and politicians) have been fond of accusing reformers with shooting the patient. Apparently the banks are perfectly healthy and have no problems, unless we institute basic reforms or even enforce the law.

The long, drawn out nature of this crisis is more terrible and causes much more suffering then a quick failure to contain events. Had the Euro failed wholesale in 2009 or 2010, it is very possible that a tremendous amount of human suffering may have been avoided. Had the American banking system quickly and unambiguously fallen apart, our situation might be completely different. Instead we get this painfully slow ship cruising relentlessly towards an iceberg. We’re used to movies, where the director starts at just before the climax and always makes sure to let us see the resolution. However, this isn’t a movie. It could be years before a breakdown comes that finally can’t be kicked down the road and requires major institutional change. Or it could be days.

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    1. David Lentini

      Horst Buchholz (in Billy Wilder’s 1, 2, 3: “The situnation his hopeless, but not serious.”

    2. Jim Haygood

      ‘The core elements of mainstream political parties continually fail to respond to the growing rot.’

      Fail to respond? They ENGINEERED it!

      Step one in responding to the rot is to accept that ‘mainstream political parties’ are not going to fix it.

      1. Nathan Tankus

        I fail to respond to problems I engineer all the time. I never said they weren’t complicit in these problems.

  1. Clive

    The other day I went on a daycation to see one of the three original Magna Carta documents which is luckily near where I live.

    While most people who are familiar with this treatise would think of it as the origins of the concept of habeas corpus (the right to not be detained without charges being brought and to be tried in a fair trial) I was struck by something different.

    My schoolboy Latin was not up to the job of understanding all of the nuances, the translation seemed to capture the environment that gave cause for it to be written. What the Magna Carta was trying to do was not give some kind of universal rights or other high aiming validation of human freedoms but, instead, primarily in my opinion seek to put some boundaries into the operation of a society of “nobility” (I use that word loosely !) which had become so profoundly dysfunctional that it had started todrag all the participants into what even they could probably see was a death spiral. The looters were being looted by the looter who has just looted them who… etc…

    In effect the Magna Carta created a balance sheet of expropriated property, money, assets and hostages being ransomed then tried to redistribute this mess in a way which the parties agreed was as fair as it could be. Then, the robber barons and the King agreed some ground rules to stop everyone sliding into the same swamp again in future. It mostly worked. This was, from what I can tell, because the situation had got so bad — and had been so bad for so long and was getting progressively worse — that everyone had no options any longer other than to stop the looting or at least agree terms for who would loot from whom under what circumstances.

    Looking back from 800 years in the future, one can only speculate what misery had had to ensue to bring the actors in the situation to that point.

    At some point we — we being the entire world — will have to come to such a genuine Grand Bargain (and no, that’s, erm, not the one that President Obama would ever construct).

    We’re not there yet. More hostages will be taken, more assets seized, more thefts will be perpetrated and more injustices imposed before even the oligarchs, the elites and the bureaucrats get the memo.

    What’s enlightening, in a perverse way, about Cyprus (and I’m desperately sorry for the population who are the serfs in this mêlée facing the drastic consequences) is that what is new here is that Oligarchs (mainly Russian) are being stiffed by the bureaucrats (the EU ones) to protect certain other elites (banking interests in France and Germany). So for the first time, it’s the “nobility” who are “suffering”. Eventually, they’ll all have to sit down at Runnymede and agree to stop squabbling over the villages and stealing each other’s serf’s wheat.

    1. David Lentini

      As I recall, the Magna Carta was the price a very weakened King John had to pay to keep the fealty of his lords after John’s disasters. As the Wiki article notes, the document was largely irrelevant by the 19th Century.

      In the end, it seems to me, all of this, like the Magna Carta, is about power. Our highly materialistic society and pseudo-scientific economic theories have dulled the democratic suspicion of highly concentrated power to the point where the bankers and technocrats now control our political institutions despite their catastrophic failures and criminal actions. Like John, they should be the weakest actors, but until the populations of the Western democracies act in unison like the lords of England nothing will change.

      1. Clive

        Hi David

        Yes, that’s kind-a what I was trying to get at in my usual rambling way ! What King John and the barons found — out of necessity — and we have to find too hopefully before we end up in similarly dire straights is the same thing: Motivation.

      2. Clive

        And the lesson today’s oligarchs can learn from King John (I doubt they will; their loss) is that there’s always, *always*, a limit to power.

        1. another

          They know that the limit to their power will be decided by the rest of us. I wonder if they are as astounded as I am at the amount of abuse we’ve been willing to take. So far.

          1. reslez

            People have no idea how much better things could be. They have no imagination. Without hope, they have no power to act.

          2. Lord Koos

            Many people have no idea how much better things could be because they are too young to have known a time when society worked a little better for the average person.

      3. from Mexico

        In Secular Cycles, the Russian scientists Peter Turchin and Sergey A. Nefedov present a great deal of empirical data regarding the 13th century. For the nobility, it was truly the golden age of the Plantagenet Cycle. For the peasants, probably not.

        From 1200 to 1300, England’s population almost doubled, from around 3 million to almost 6 million. The number of nobles, both greater barons and peers, increased from 160 to 416, and their average income increased from 200 pounds to 668 pounds.

        During that same time, the price of wheat soared by 300%. Meanwhile, the average rural wage decreased by 50%. As a result, what Turchin and Nefedov called the “misery index” soared from 3.5 in 1200 to 5.5 in 1300.

        1. from Mexico

          And as we know, the 13th century and the rapacious greed and corruption of the nobles-clergy marked the beginning of the end of the feudalist order.

          In the first part of the 14th century, William of Occam and the Franciscans unleashed their nominalist revolution, which by the late 15th century had completely erroded the moral and intellectual authority of the scholastics, ushering in the rapid decline in the political power of the church and the nobility. By the middle 17th century, the church and the nobility were mere skeletons of their former selves, and much moral and intellectual legitimacy, as well as political power, had shifted to the ascendent burgher oligarchs — the bourgeoisie.

          No one captured the tumultuous changes of the times, and the nostalgia for a bygone era, better than the poet John Donne, who in 1611 in An Anatomy of the World wrote:

          And now the Springs and Sommers which we see,
          Like sonnes of women after fifty bee.
          And new Philosophy cals all in doubt,
          The Elephant of fire is quite put out;
          The Sun is lost, and th’earth, and no mans wit
          Can well direct him, where to looke for it.
          And freely men confesse, that this world’s spent,
          When in the Planets, and the Firmament
          They seeke so many new; they see that this
          Is crumbled out againe to his Atomis.
          ‘Tis all in peeces, all cohaerance gone;
          All just supply, and all Relation:
          Prince, Subject, Father, Sonne, are things forgot,
          For every man alone thinkes he hath got
          To be a Phoenix, and that there can bee
          None of that kinde, of which is is, but hee.

          We see the identical sentiments expressed by William Butler Yeats in 1919 when Modernism (capitalism from the narrow point of view of economists) first entered its age of acute crisis. From The Second Coming:

          ‘Tis all in pieces, all Cohaerance gone,
          All just supply, and all Relation:

          Things fall aprat; the center cannot hold;
          Mere anarchy is loosed upon the world..;
          The best lack all conviction, while the worst
          Are full of passionate intensity;

          For every man alone thinkes he hath got
          To be a Phoenix, and that there can bee
          None of that kinde, of which he is, but hee.

          1. Clive

            The Black Death helped out with social mobility considerably too. However, mass depopulation isn’t what I’d call a good solution by any measure :-)

          2. from Mexico

            Yep. A number of natural events (the Black Death, the onset of the Little Ice Age, etc.) as well as man-made events (the Hundred Years War, the development of gunpowerder, the Crusades, urban development and social mobility, etc.) were of crucial importance to the formation of the anxiety and insecurity that made the rationalist (Scholastic) vision of the world unbelievable and the nominalist vision of the world believable.

            What effect do you believe global warming and resource depletion are going to have on our current love affair with rationality?

          3. shyHulud

            well, in germany we have a saying:
            “every day there are 4 fools released on mainstreet – find them if you wanna make profit”
            ..this leads to social darvinism – exploit the weaker – witch is in my opinion fashism – and thats whats going on all over the financial world.
            me got poem to ;)

            Desires of wealth anothers wishes hold
            And yet how many have been choked with Gold?
            This only hunts for honour, yet who shall
            Ascend the higher, shall more wretched fall?


            (the articles and comments on nakedcapitalism are very educated and sophstcated, so i hope not to sound too stupid)

          4. The Dork of Cork.

            I always love that line…………..

            “honey I’m off to fight the 100 years war”

      4. diptherio

        On a side note, the movie Ironclad (2011) does a pretty good job of portraying this situation. While not exactly an educational flick, it is pretty well written and Paul Giamatti gives a killer (literally) performance as King John. Also Templars!

        1. nonclassical

          ….little enough “rationality” exists given fundamentalist science denial-corporate resource extractors, on climate change…

    2. Moneta

      History has shown us that it is often the lower rich who revolt and force change, not the poor at the bottom of the pyramid… Magna Carta, French Revolution…

      I don’t think it will be different. Right now the top 15-20% are mostly passive because many have been spared. But the 1%ers are moving up the curve.

      IMO, it will unfortunately take cuts in the top 20% to see some action: SS cuts, pension cuts, equity market drops, bond cuts, etc. Until then, one country after another will drop like a fly.

      1. from Mexico

        Moneta says:

        History has shown us that it is often the lower rich who revolt and force change…

        But the industrial age ushered in an unprecedented era, Marx being the most famous and strident advocate and philosopher of the industrial masses, but certainly not the only one.

        1. Moneta

          It took at least 50 years of mass crushing industrialization before we got his philosophies.

          The masses might protest but I strongly believe that we need the buy-in of the lower rich or bourgeois to get some traction.

        2. Paul W

          But how many of the masses ever read Marx? Poll the west’s working class today and you’ll find they are more familiar with the Marx Brothers.

          Trotsky was an upper middle class Jew and, I believe, Lenin also came from a well off family. Che and Fidel, again upper middle class backgrounds. The masses may be willing followers when leadership to revolt comes along, however they are too busy trying to survive to ever produce such leadership.

          1. Andrew Watts

            This idea that leaders only emerge from the middle and upper classes reeks of snobbery. Any cursory research into history will reveal military, social, and political leaders who had no formal education or emerged from the lower classes.

          2. Paul W

            Andrew, of course I am generalising and there will be exceptions to the rule. Yet in 2008 when Americans demanded change who did they turn to? A multi millionaire from Chicago.

          3. from Mexico

            @ Andrew Watts

            A couple of good examples of what you are speaking of are Luiz Inácio Lula da Silva and Hugo Chávez. Even though they have very different poltical philosophies, they both nevertheless come from extremely humble backgrounds, and are almost unqiue amongst world leaders in taking a stand against the neoliberal juggernaut.

            Then what George Orwell wrote is also worth remembering:

            In the long run — it is important to remember that it is only in the long run — the working class remains the most reliable enemy of fascism, simply because the working class stands to gain most by a decent construciton of socity. Unlike other classes or categories, it can’t be permanently bribed.


            The intelligenstsia are the people who squeal the loudest against fascism, and yet a respectable proportion of them collapse into defeatism when the pinch comes. They are far-sighted enough to see the odds against them, and moreover they can be bribed… With the working-class it is the other way about… [T]hey easily swallow the promises of fascism, yet sooner or later they always take up the struggle again. they must do so, because in their own bodies they always discover that the promises of fascism cannot be fulfilled.

            –GEORGE ORWELL, “Looking back on the Spanish War”

          4. lambert strether

            “The masses.” That’s about as serious an analytical tool as “tweens” or “Generation X.” And as about as respectful of those objectified by it, I might add.

          5. Andrew Watts

            Paul W: As far as the superior abilities and traits of those we elect, Alexis de Tocqueville said it best when he stated;

            “I do not know if the people of the United States would vote for superior men if they ran for office, but there can be no doubt that such men do not run.”

            While there has been a few exceptions to that rule, they are few and far between. What makes democracy a superior form of government is not the nature or intelligence of it’s leaders. Otherwise democracy would most certainly be doomed.

      2. Clive

        Good point Moneta which I wanted to but totally failed to emphasise in my OP, yep, the Magna Carta was not as a result of some popular uprising but instead because the elites of the day came to see their own survival at risk in what was, in effect, the ultimate in neoliberal living (!) i.e. 13th century England. To think, some wish to return us to that development model… any how, I digress…

        So even if the eventual benefits to the bulk of the population of the principles established in the Magna Carta may well have been nothing more than unintended consequences, well, I’m not complaining. And if a crisis brought about similar change today only because the elites couldn’t go on thieving from each other without ultimately reducing the pot overall (a negative sum game in other words), then I for one will take it.

    3. Glenn Condell

      ‘What’s enlightening, in a perverse way, about Cyprus (and I’m desperately sorry for the population who are the serfs in this mêlée facing the drastic consequences) is that what is new here is that Oligarchs (mainly Russian) are being stiffed by the bureaucrats (the EU ones) to protect certain other elites (banking interests in France and Germany). So for the first time, it’s the “nobility” who are “suffering”.’

      It’s not just serfs and oligarchs who are suffering:

      ‘Eventually, they’ll all have to sit down at Runnymede and agree to stop squabbling over the villages and stealing each other’s serf’s wheat.’

      We can only hope it is a Runnymede and not a Versailles or Yalta.

  2. from Mexico

    The prototype for what Tankus is describing was the S&L crisis of the 1980s. From the time the crisis began in 1980 it was nine years, not until 1989, that the crisis was finally dealt with. In the meantime the crisis continued to fester, and as a result the cost to resolve the crisis was many, many times what it would have been if the crisis would have been dealt with effieicently and expeditiously in 1980.

    Under the deregulatory zeal of the Reagan administration, we had the perfect example of what not to do in the face of a banking crisis. However, we learned nothing from this debacle. The current response to the GFC is an exact repeat of what the Reagan administration did, but on a far, far, far greater scale, on a scale several orders of magnitude greater.

    The FDIC wrote a very telling postmortem of the S&L crisis:

    In the conclusion, the authors list five “lessons of the S&L disaster.” And if one reads through them, on can see that our mini-Reagans — Bush, Obama, Cameron, Merkel, etc. — have ignored all of these lessons, and are doing exactly the opposite of what needs to be done to resolve the crisis:

    The regulatory lessons of the S&L disaster are many. First and foremost is the need for strong and effective supervision of insured depository institutions, particularly if they are given new or expanded powers or are experiencing rapid growth. Second, this can be accomplished only if the industry does not have too much influence over its regulators and if the regulators have the ability to hire, train, and retain qualified staff. In this regard, the bank regulatory agencies need to remain politically independent. Third, the regulators need adequate financial resources. Although the Federal Home Loan Bank System was too close to the industry it regulated during the early years of the crisis and its policies greatly contributed to the problem, the Bank Board had been given far too few resources to supervise effectively an industry that was allowed vast new powers. Fourth, the S&L crisis highlights the importance of promptly closing insolvent, insured financial institutions in order to minimize potential losses to the deposit insurance fund and to ensure a more efficient financial marketplace. Finally, resolution of failing financial institutions requires that the deposit insurance fund be strongly capitalized with real reserves, not just federal guarantees.

    Immanuel Wallerstein argues that phenomena like the current tsumani of mini-Reagans signal the twilight years of capitalism, and that this presents many dangers, but it also presents many opportunities. The political and economic system that has dominated Western civilization since the 17th century, and indeed came to dominate the world, has become so obsolete that it is no longer viable. Whereas efforts to change the system during the 18th, 19th, and 20th centuries met with little success and changed little, because the system had still not reached the stage of total dysfunction, that is not so of our current era. When capitalism finally implodes — probably somewhere within the next 50 years — there will great opportunities for change and to shape the successor system either for the better or the worse:

    1. steve from virginia

      “Immanuel Wallerstein argues that phenomena like the current tsumani of mini-Reagans signal the twilight years of capitalism …”

      The mini-Reagans in all the other countries around the world is evidence to the same thing. Doubling down on failure = paradox of thrift. Then again …

      “The political and economic system that has dominated Western civilization since the 17th century, and indeed came to dominate the world, has become so obsolete that it is no longer viable.”

      Hegemonic popular culture does not allow real alternatives, every dynamic is reduced into- or becomes a ‘form’ that is then placed with pre-existing pop-cultural hierarchies. ‘Capitalism’ is a fashion along side ‘Marxism’ or ‘Occupy’, ‘Punk Rock’ or ‘Salafism’. These are emptied of whatever potency they might possess on their own or might have possessed at one time. They are watered down into mere ‘things’, cultural artifacts and identifiers similar to tee-shirts, flavored coffees or ‘designer’ handbags.

      These ‘things’ can be sold in stores or online … or otherwise made use of. They can never be taken seriously by themselves, only the popularity of their teenaged adherents-of-the-moment, their page-views on Google or number of Facebook friends. They are at best the means by which the representative actors become famous for fifteen seconds.

      The mini-Reagans themselves are simply actors reading from pop-culture scripts, they meet the media-generated expectations of what a ‘leader’ or ‘business executive’ or ‘economist’ is supposed to look and sound like. They too are hollow forms … reality becomes a moving target, the end is reduced to trying to ‘interpret’ a kaleidoscope or an acid trip.

      If there was no ‘Paul Krugman’ another ‘Paul Krugmen’ would emerge/be invented/cloned/pulled out from under a rock … to spew the same nonsense that today’s Paul Krugman emits as so-called ‘public economist’, a ‘George Brush’ would do the same for absent George Bush … or Barack Obama.

      … meanwhile, on the factory floor, the slowly deteriorating business of grinding out sausages is underway by those who appear to know what they are about. In a system that is a ponzi scheme it is hard to know who are the promoters and who are the shills. If the bosses are fake … who is real?

  3. LAS

    By the time of the Enron collapse, it was fully clear how full of fraud corporate finance had become, but this picture was received as training material by those in the know and not something to repent of.

    1. AbyNormal

      i see LTCM as the foreshadower for what the financial industry would accomplish when corralled in the same room

    2. Glenn Condell

      Yeah, I can recall just assuming that the Enron/Worldcom messes would result in a cleanup. Ditto the Arthur Andersen meltdown. Shows you should never assume…

      The rot had been setting in a while by then, but it does seem that the great decoupling of finance from the rule of law took off around Gramm Leach Bliley, when you began to hear the term ‘off balance sheet’ on a regular basis. What was disturbing even then was the fact that such a term, which doesn’t bother to hide its meaning, ie regulatory and tax evasion, was mentioned in passing without a scintilla of opprobrium, indeed often with applause. Savvy businessmen, y’know.

      The rot has progressed far enough that a major party electoral candidate can stand for POTUS while having much of his (ill-gotten) wealth stashed in offshore tax havens, a fact that (had it been generally known) a generation ago would surely have disqualified him from running for anything. A candidate with an albatross like that here in Australia would be flat out running for local council.

  4. JGordon

    “This is maddening for those of us on the outside, because it means we have to carefully watch every change and tear our hair out hoping for a half decent resolution while being driven crazy by the stupidity/evil of decision makers…”

    Or, you could just give up and start learning how to live independently of the corrupt and failing system. Those people most likely to have survived when Rome fell weren’t the ones who were invested in the Roman system. In fact, for the peasant farmers who were being taxed to death by the state, while be forced to use debased currency by fiat, the collapse of empire was a wonderful blessing.

    1. from Mexico

      Ah yes, the flight from politics and society argument. It would be difficult to find a worse dead end than this.

      As Hannah Arendt noted of this siren call for rugged individualism in On Revolutuion:

      On a more sophisticated level, we may consider this disappearance of the ‘taste for political freedom’ as the withdrawl of the individual into an ‘inward domain of consciousness’ where it finds the only ‘appropriate region of human liberty’; from this region, as though from a crumbling fortress, the individual, having got the better of the citizen, will then defend himself against a society which in its turn gets ‘the better of individuality’.

      1. Eclair

        Perhaps JGorden has a vision, not of scattered individualists retreating into their own states of denial and fantasy, but of groups of individuals who, realizing that the current political system is corrupt and disfunctional, withdraw their support and begin to develop and live their new communal/political reality.

        Extended families, communal housing, towns, community farms …. whatever.

      2. Paul W

        You make it sound lie a bad thing. We live in a society where one is hard pressed to find agreement on anything. Is one suppose to sit around waiting for that miraculous day when we all have the same agenda, same goals and same method for achieving them? By withdrawing from the system, even to a small degree, one is holding those in power accountable for their behavior. Individuals are entitled to exercise their freedom of choice and there is nothing wrong in doing so. It may not change anything, however waiting for your utopian revolution isn’t going to result in throwing the bums out either.

      3. mk

        another view would be to reorganized life so as to disengage from doing business with corporations as much as possible and get on to the more important business of creating a new local economy.

        Buy local, eat real food grown locally, move your money to a credit union, create a new bank for the people, stop using credit, stop buying trash and luxuries, save your money, etc.

        Step backwards to progress.

      4. diptherio

        I’m actually of a mind to agree with JGordon on this one, and I don’t see why that automatically implies a “flight from politics and society.” Sure, a lot of us think of the survivalist gun nut with 4X4 and the concrete bunker (this guy), but it doesn’t have to be that way.

        What do you think intentional communities and communes are, man? Answer: people trying to live outside the current inhuman system so that they can form a more human society, with it’s own more-human politics. It also seems to me that choosing to go live on a commune, possibly with very few modern conviences, is itself a fairly powerful political statement. “Things are f-ed up to such an extent that I’m willing to sacrifice my material and financial comfort (not to mention success) in order to resist.” How is that a flight from politics?

        Do we not all agree that the game is rigged? If the game is rigged, why should we continue to play it? Do we think that those operating the current game can be made to reform themselves, to start running the game fairly? So shouldn’t we be trying to build alternative games to play? I think we should. This doesn’t mean fleeing from society or politics (as if such a thing were even possible) but rather creating alternate forms of each along side the currently ascendant luciferian order.

          1. from Mexico

            And of course all this alludes to the great unsolved political conundrum of the 20th century:

            While the Populists committed themselves to a people’s movement of “the industrial millions” as the instrument of reform, the history of successful accessions to power in the twentieth century has had a common thread — victory through a red army directed by a central political committee. No socialist citizenry has been able to bring the post-revolutionary army or central party apparatus under democratic control, any more than any non-socialist popular movement has been able to make the corporate state responsibe to the mass aspirations for human dignity… Rather, our numerous progressive societies have created, or are busily creating, overpowering cultural orthodoxies through which the citizenry is persuaded to accept the system as “democratic” — even as the private lives of millions become more deferential, anxiety-ridden, and (no other phrase will serve) less free.

            — LAWRENCE GOODWYN, The Populist Moment

          2. lambert strether

            Well, forty years ago some hippies moved up to Maine and bought land and started farming. And today we have a burgeoning organic agriculture system, several heirloom seed companies, the world’s largest Permaculture meetup in Portland, ME, and sustainable ag programs at the university. Maine is blessed with water, with lack of oil shale, and (due to the luck of the draw) with an increasingly temperate climate.

            So I think the hippies turned out just fine. The way to build an alternative political economy is, ya know, to build an alternative political economy.

          3. from Mexico

            lambert strether says:

            Well, forty years ago some hippies moved up to Maine and bought land and started farming….

            So I think the hippies turned out just fine. The way to build an alternative political economy is, ya know, to build an alternative political economy.

            Well rugged individualism is always fun when one is a trust baby. But “buying land” and “building an alternative political economy” really isn’t an option for those who lack capital. When I was young my parents lived from week to week, from paycheck to paycheck. The idea of doing something like buying land and starting farming was completely out of the realm of possibility. Of course people who are well-heeled trust babies are completely oblivious to the way working-class people live.

            Which takes us full circle back to my original point. When German idealism, transcendentalism and romanticism crossed the Atlantic it lost its historical foundation. We’re all familiar with the progression from Kant to Fichte to Hegel, and from there to Marx and the anarchists. So for the Europeans it was all about the people. But in the American setting it was Kant to Fichte to the libertarians. The realm of spirit defined by the new German philosophy became all about the individual.

            As Jacques Barzun put it in From Dawn to Decadence:

            An American critic has made a cognate point; both Emerson and Thoreau (and later Whitman) exhibit what he calls “the imperial self.” That self, confident in its INDIVIDUALISM, tells others to shuffle off communal ties and enjoy a self-made universe in all its purity.

            This lesson proved congenial to many Americans, especially in Thoreau’s variation. To this day Walden is a name to conure with; it means fleeing the daily grind, living at the heart of nature, free to breathe and contemplate. Self-reliant PRIMATIVISM is the intended message, but not the truth about Thoreau’s escape: he took civilization with him: clothes, nails, seed, and lumber, none of which he made. Like Crusoe he survived thanks to essential fruits of social effort,… nor did he give up going back to Concord during the two-year demonstration. These and other inconsistencies pass unnoticed in the bliss one shares with the narrator.

          4. JTFaraday

            The beatings will continue until morale improves!

            What I liked about Diptherio’s comment about “intentional communities” is that such thinking could, potentially, provide a counterpoint to mass society and our collective intellectual dead end.


            Despite the fact that some people here today are taking exception to the denigrating term, “the masses,” it does seem to be that case that we of the masses can’t even begin to think about other ways to live.

            That we can’t “live it” is one thing. That we can’t even begin to think about it is another. I’m certainly wouldn’t discourage anyone who wants to try to do that.

            There’s nothing more miserable than our current public policy discourse.

  5. craazyman

    i thoght this was going to be about waiting tables in a restaurant.

    you can live free — no pun intended — while your young. the lack of money isn’t much of an obstacle as long as you have a place to crash and to drink and chase women or men as the case may be. and to imagine how wonderful things can be. that’s where you live, not in reality

    then you hit a certain age and it doesn’t work anymore and then if you have nothing there’s only life behind you and death in front of you. it’s a long runway to death and you have to figure out soemthig to do, like a job. then you need a job.

    maybe that’s why there hasn’t been a revolution yet. because they’re all young enough that they haven’t hit the runway, yet. it’s the runway that makes the political economy terrifying, ’cause you think there should be some answer and there isn’t. there’s only work and you’re lucky now if you have it.

    1. Paul W

      Not in my society. Where I work we often hire 14 year olds. Thus they have full time school, homework and a job. Doesn’t sound very free to me. For me – who didn’t start my first job until I was 18 – it’s all mindboggling. Do we no longer have child labour laws?

      I’m afraid the young aren’t getting a free ride. They’re being conditioned right off the bat to work, earn money to buy material things, followed by getting into debt to buy more material things, then staying in debt.

      A night out boozing it up and chasing anything on two feet is fine. They just need to remember to call in sick to work the next day.

      1. craazyman

        each generation has to learn its own rebellion I guess.

        Now when I was just a little boy standin’ to my Daddy’s knee
        My Poppa said son don’t let the man get you do what he done to me
        ’cause he’ll get you ’cause he’ll get you now now.

        I can remember the fourth of July runnin’ through the backwood bare.
        And I can still hear my old hound dog barkin’ chasin’ down a hoodoo there
        Chasin’ down a hoodoo there.

        -J. Fogerty, Born on the Bayou, Credence Clearwater REvival

    2. diptherio

      Yeah, in my early twenties I thought, “I’ll get an economics degree! I don’t care if it helps me get a job or not, I’ll understand how the system works and that’s the most important thing there is: understanding!”

      Now, in my early thirties, I think, “Why the hell didn’t I get a two-year technical degree instead? You can’t do sh*t with an econ BA and now I’m just hyper-aware of how badly we’re all being screwed…wonderful. I could be an electrician right now, making $60/hour.”

      It didn’t used to bother me that I was working low-wage jobs, since money wasn’t my main concern, but the older I get the more psychologically taxing it is to continue in manual labor. A person can only be looked down on so many times, only be talked down to so many times, before something has to give.

      Me?…I’m going back for a Master’s. Apparently, I didn’t learn my lesson…

      1. JTFaraday

        Well, for what it’s worth, you sound very wise for your early 30s. And there’s too many kids in graduate school.

      2. casino implosion

        I had an English BA and learned a skilled trade in my early 30s and it worked out well.

    3. Moneta

      For my entire career I’ve been expecting this current ordeal. I’ve been telling everyone around me what to expect. Yet, their eyes glaze over. Either I am told I am a doomer or they tell me there is more to life than money.

      I find the last one incredibly annoying. Why? Because the only reason they can say this IS because they are being propped up by natioanl Western wealth. If they were suddenly plopped into some poor Indian city as a pariah, I’m pretty sure their ideolgy would change on a dime.

      To not care about money, you must have a lot of it.

      Until people’s material lifestyle really drops, they will remain deluded. And right now, in Canada anyway, the top 20% still has nothing to complain about materially.

      1. Paul W

        Agreed Moneta, it’s a bit much to have people up to their eyeballs in debt pretending they don’t care about money and judging responsible people who don’t go into debt negatively. They’ll care about money if the credit ever dries up!

        Is it only 20% still materially well off. I was of the impression it was at least 50%. Maybe I just live in a more well off community. Or perhaps, as someone suggested here, I should get out more.

        Your point is well made. It is impossible to change things politically until all that material wealth evaporates. In other words, we can’t change things until it’s too late.

        1. Moneta

          It’s hard to calculate… I guess it depends on how you measure wealth. I look at net worth. When I speak of the 15-20%, I am essentially speaking of those with enough net worth to fully retire at 65. Something like 80% of Canada’s wealth is in the hands of the top 20%.

          However, most people only look at assets. If you don’t account for debt, the vast majority of the Western world still lives in luxury!

      2. craazyman

        it was perhaps a diferent time, not too long ago but long enough to be another world, maybe 20 or more years, but it wasn’t like now where you’re enslaved from birth

        I understand what you’re saying. If you need 100 grand or more to go to college and that’s on your back it changes everything, one wrong step and you’re road kill, one wrong move and yo’re dead.

        it’s like the Rasta dude in the mailroom where I work, he won’t go out on the streets at night just to be safe, in case he get frisked, in case he’s in the wrong place. he says “when you get in trouble, you can’t get out” — when you have no money, not like when you launder drug money like HSBC — it so true. one wrong step for you and it’s over, and so you don’t even walk off the line, and the line is a line of death, that’s pretty much all it is, just a death walk, to be so careful and disciplined like a razor blade you can’t even live

    4. Jim

      “That self, confident in its individualism…”

      It is important to remember that in the United States, from approximately the 1750s thru the 1840s, the emerging society radiated an interest in tinkering, building and making money for oneself. Risk taking immigrants, westward expansion, small artisan businesses and farms filled the geographical landscape—individualism was, for at least a significant portion of the population in the Northeast and Midwest an experiential reality. At that time, I would argue, cultural values and everyday experience were often closely aligned.

      1. from Mexico


        And while millions were living in their dream world of rugged individualism, the oligarchs were busy consolidating centralized power in Washington. Do we have to be reminded of how that movie ended? Earth to Brahmans: they’re not going to leave you alone to live happily ever after in your little bunker.

        It’s one thing to think and live outside the box. It’s quite another to believe one is thinking and living outside the box, but in reality all the while thinking and living within the box. There’s a word for that. It’s called delusion.

        The idea of Brahma is to repudiate the bourgeoisie world, to live in an ideal realm from which one bestows culture on society. Of course the Brahmans never repudiated anything, because to do that they would have had to change the box.

        To believe that building “an alternative political economy” is achieved by the act of buying land is hardly thinking or living outside the box.

  6. Moneta

    This is maddening for those of us on the outside, because it means we have to carefully watch every change and tear our hair out hoping for a half decent resolution
    I understand you 100% but doesn’t it just show how invested we are in the status quo. We have given them our power expecting them to make it right which they will not do.

    1. Moneta

      This is happening because we are refusing to unite since this would guarantee short term pain.

      We refuse to unite because we still have the hope that we will be OK while the others around us sink.

      We have been brainwashed into a fatal form of competition.

        1. Moneta

          Not sure yet. It took me a few years not be angry… now I understand that’s it’s simply “evolution”, part of the cycle and I’ve just started thinking about how to make a contribution.

        1. Joe Renter

          …by making your Brothers need as a measure of your own.
          We really do not see the whole picture. Our reality tunnel is limited. Bring forth your Light so you can see.

      1. Glenn Condell

        ‘This is happening because we are refusing to unite since this would guarantee short term pain. We refuse to unite because we still have the hope that we will be OK while the others around us sink.’

        This is true up to a point, but I think it’s not so much a ‘refusal’ to unite as an absence of a dominant narrative about how to do so… the vacant space where revolution ought to be is created as much by bewilderment and a lack of imagination as it is by fear and selfishness. I think that many people think ‘what the fuck can I do’ before they think ‘hopefully I’ll be alright Jack, shame about the neighbours’

        There is no road map for unity, or rather the maps we see involve new or renovated parties, ‘movements’ for change and/or charismatic leaders – all of which a growing portion of informed citizens see as part of the problem and antithetical to any acceptable solution. Been there, done that, too easy (child’s play in fact) for the 1% to neuter or turn.

        The bewilderment is down partly to our modern atomisation, where we communicate as discrete nodes rather than come together physically, but also to a decades long elite effort to scare and distract and misinform and…. bewilder.

        ‘We have been brainwashed into a fatal form of competition’

        The Janus-faced ruling party’s wings have been turned into the Blues and the Greens and what do they care if we have a Nika riot?

        But the brainwashing’s not just the faux-rivalry, it’s the relentless TINA and the scrupulous screening out of ‘green shoot’ political or economic ideas from the mainstream, so that the rotting old oaks are the only visible flora in the garden.

        It is no surprise and certainly no accident that there is no ‘dominant narrative’ about how to unite for change. Anyone who managed to come up with one should avoid small planes, and employ a food-taster.

  7. danb

    Nathan writes, “That’s the nature of oligarchic power. No matter how late in the process it is, resources can always be mustered in an effort to patch up problems.” Until the natural resources (primarily low entropy energy from oil) are no longer available to stanch a growing list of dilemmas and problems. Net energy return from oil is decreasing while problems mount. We should, I think, ask, “Where does oligarchic power come from? How will it be sapped? and What leverage points to overcome neoliberalism become available?” Thermodynamics is indifferent to oligarchy.

      1. Moneta

        When the Vikings could not increase their well-being with what nature had given them, they sailed off to loot other people’s energy.

        And they probably felt no guilt whatsoever because those they were looting benefited from better geographic bounty by simple luck of the draw.

  8. steve from virginia

    “Wolfgang Munchau of the Financial Times has argued that the success of the OMT has actually worsened the banking crisis. By ameliorating the most pressing symptoms of the crisis, that of widening government bond yields in weaker countries, it protected key interests while dulling the political impetus to attack the issue more fundamentally.”

    Nobody wants to attack the issue more fundamentally, nobody wants to even think about the issue or discuss it: the fundamental issues are taboo. What is ‘managed’ are perceptions, instead.

    When the bosses understand, they become depressed. The actions of the European and American bosses since 2009 are those of depressed individuals who have lost control over both events and themselves. They are tasked with managing decline and they simply do not possess the necessary tools: candor, courage, restraint, leadership.

    Instead of dialog there is confused babble. The Internet has given everyone in the world a soapbox. Everyone online is an instant expert. There are dozens of putative analyses and ‘solutions’ that cancel other analyses and solutions out. The background is negativity and cynicism … then laziness and disregard. Even the rational voices hold irrational positions … eventually, the rest give up and look to their own interests because there is no point to ‘participating’. They take their baseballs and go home. They join little communities or become farmers.

    Meanwhile, the bosses steal with impunity whatever isn’t nailed down. The act of theft by those in positions to know speaks for itself. The bosses turn the virtues of the citizens — restraint, sense of public duty, caution, fail play — against them. Management tools are then deployed against them as well, as evidenced by banking regulations in Cyprus levied against depositors there.

    The long, drawn out nature of this crisis is more terrible and causes much more suffering then a quick failure to contain events. Had the Euro failed wholesale in 2009 or 2010, it is very possible that a tremendous amount of human suffering may have been avoided.

    The again, probably not. What is excluded from the conversation are certain thermodynamic realities. These realities aren’t changed by different management ‘styles’ or fashions. They have emerged in Greece and Spain, in Egypt and Syria: all of these countries have been bankrupted by the cost of fuel waste plus the debts taken on to finance this waste. In Greece, the instrument of bankruptcy has been bureaucracy. In Syria and elsewhere, ‘resolution’ is by way of air strikes and rocket-propelled grenades. In all these places the outcome is the same … ruin: energy conservation by other means.

    By design our economy runs by destroying capital, the destruction process is collateral for our money. After 200 years of industrialized waste, there is less capital — particularly petroleum — to share. As a result, increasing numbers of economic participants are being excluded … by violent and disruptive means … at the end of the day, our waste will end … by way of our own devices doing violence to themselves and us.

    France … Detroit … Yemen. There is no ‘coming back’ from this, the ‘good old days’ of carefree resource waste are gone forever. What is underway is a permanent change. There aren’t going to be any electric cars. There aren’t going to be any robot kitchens. There will be no ‘singularity’ to rescue us from our greed, political or otherwise. Our agriculture will become less productive. There will be less resources. Our own blind folly will close in on us. Our self-created problems will solve themselves …

    Solve themselves. We change or we are changed.

  9. Susan the other

    In the wake of capitalism. This post is a wake. It is bereavement. Depressing as hell. But it’s kind of like a higher level of schadenfreude because it’s always nice to know everybody is as miserable as I am. Existentially speaking. :-(

    1. Eclair

      Well said, Susan the other! I’ll take just a wee drop more of the Jamie and we’ll listen to another tale.

  10. Hal Roberts

    All the missing money in Cypress is nothing but a case of “Whales are To Big To Fail (TBTF)”. You can’t tell me that the Eurozone Finance Ministers and all their little trolls don’t know about satellite banks with in the own Union, they could have cut access to these banks even from Russia. It was reported Cypress bank were leverage 26 to 1 maybe more, on 60 or so billion, maybe more. When you go giving big hair cuts to that type of money a lot of investment money gets cut out the Markets and they, the Markets lose. The Euro just allowed the big money to haul ass in the name of the own investments, and screwed the hell out of the little guys in Cypress. It’s all one big end around play to save the Whales and the Markets over all currency’s and Nations. Global Elitist Rule.

  11. sierra7

    “Capitalism” as we practice it is in my opinion based on the, “Greater Fool Theory”!
    To get some other damned fool to buy what you thought had value and then bought as the first fool…..
    And, today go deep into debt to buy what the other fool wants to sell you!

  12. photos fabric

    An outstanding share! I have just forwarded this onto a co-worker who
    was doing a little homework on this. And he in fact ordered me lunch due to the fact that I stumbled upon it for him.
    .. lol. So let me reword this…. Thank YOU for the meal!

    ! But yeah, thanks for spending time to talk about this topic here
    on your website.

  13. Roger Erickson

    A timely reminder. Some suggestions for cutting through the clutte.

    1) Seems irrefutable that our policy apparatus has remained far too narrow, EXACTLY while the degrees-of-freedom of our populace has dramatically expanded.
    Instead of extra DoF being leveraged through more discipline, we have less discipline, funcitonally.

    2) Networked systems, when facing growth, solve #1 by reconnecting everything to everything, then relaxing to a new, leanest, connection-state that will suffice for awhile. That accounts for physiological lifespans, and cultural lifespans as well.

    3) When do growning, networked systems reconnect all-to-all, then relax? Only when they invent the catalysts which trigger invention of new methods which actually achieve the desired outcome. There IS no simple thing to do, but there is an iterative, re-tuning process.

    4) Possible guesses?
    …When K-12 education is completely altered, to focus more on team-building and context-parsing vs data memorization sans context.
    …When growing numbers of increasingly isolated specialists quit spendig full-time is isolated specialization, and instead participate in more interleaved coordination. (20 hour work weeks? 20 hours recursive context discovery? Effectively, half time work and half time “council” discussion. That’s roughly how tribal societies function. We’ll have to do something different to leverage the return-on-coordination out of 315 million people.)

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