Rambling about the financial crisis (Part 1)

We are beginning to live in difficult times again. The concept of a “financial crisis” fills the media, while leaders call for calm and restraint. And now it seems that they expect the common man to plead guilty and accept his responsibility for what has happened. But the reality is different. The common man – any one of us - is only an obligatory, infinitesimal component of the system of production and global trade that drives us to buy everything they put in front of us and according to certain rules of behavior. And herein lies the only significance of the common man. If the consumer does not fulfill their role, this whole house of cards would collapse spectacularly and the owners of money would be left with mountains of "junk" devoid of any value. The downside is that if you stop this enormous machine, production would cease and with it our jobs. In the absence of sales, profits would disappear, which would leave no "trickle" for us to live on. Therefore, even if we do not like it, these opposing forces that group together wolves and lambs, are complementary parts of the natural balance. (Only Communism could break the curse. What a pity it only works in a utopia!).

In an analogy from Japanese history, we might say that we are similar to peasants who, prior to the tenth century, were sent en masse to war for their "lords".   Thus, agricultural workers were scarce, causing widespread famine in the respective regions due to insufficient rice production. Therefore, the conclusion was that these farmers should be preserved and maintained in the region to fully comply with their ancestral work. Their absence on the battlefield is a class warrior was filled by highly specialized samurai. The same is true in the present age wherein the common man is prepared from childhood to work all their lives. All this effort is then translated into consumption. Therefore, war itself become frowned upon even by war mongers whereas too many potential consumers die, resulting in long-term production losses in large regions.

Mega multinationals own the companies that profit from consumer spending in retail goods and services (electricity, bread, clothing, entertainment, etc.). Large investors, with whom they rub shoulders on a daily basis, also profit from these unstable transactional games. Trillions of dollars are involved and, in the stock exchanges, everything comes down to dollar signs, which are devoid of any true value. As Capitalism is based on the representation of gold in the form of dubiously backed paper money, there is a constant concern about it being out of control. Though, to date at least, the controls system has failed to or has not tried to achieve the effectiveness required. Everything remains dependent on the degree of "credibility" of the seller. "Confidence" is the keyword that enables transfer everything imaginable through many hands. Hence, “Big Money” takes tremendous risks through its unpredictable actions, changing stock values from one minute to another, as well as the behavior of the supply and demand indicators, adding to this - when circumstances permit - "speculation", which cause exorbitant prices and opportunities for windfall profits.

It was precisely this speculative environment which gave rise to the current financial crisis, to which many are already adding the bywords "slowdown", "global crisis", "recession", and so on.  The sad orchestrator of events was the United States who, through its brazen speculation in real estate, even affected Europe with its long tentacles.  The real estate sector was converted overnight into a highly profitable sector in which stock transactions netted millions. Its success was based on an unexpected growth in demand for real estate. What they did not know was that the miracle was based on low-interest loans offered to high-risk borrowers that were unable to provide collateral to ensure regular repayment of their mortgages. There was a “housing bubble” that grew to include other sectors of the economy. The full drama came to light when lenders’ coffers were overwhelmed by the uncontrolled pressure of their lenders. The bluff at work within the stock markets became untenable.  The delicate balance, in which they moved, was shattered when it crashed into the empty pockets of bankrupt debtors who not only lost the dream of home ownership but everything else they might own.

When the bubble burst, mistrust and panic multiplied in a domino effect. Shares dropped sharply, as did real estate (at up rate of up to 100% of original value).  Homeowners were unaware of available financing alternatives, loans sharply became restricted, interest rates rose, which, in turn, increased pressure and a tendency towards stagnation. The markets tumbled and the spectre of a spiralling bankruptcy began to shake foundations that go beyond borders. The government that is also experiencing its own crisis in credibility jumps to the forefront, but not to unmask the guilty. Instead it tries to plug the enormous gaping hole which had begun to pull even the administration into itself.  But its lifeboat of several billion dollars taken from the national treasury was no longer sufficient. (The unanswered question is in whose hands did the rescue plan’s billions of dollars end up?). Every country in the world that began to feel the first tidal wave rushed under various protective umbrellas, pooling efforts to mitigate some of the harmful effects.  Surely many of governments or economic blocs are exploring paths and critical components that may properly channel water to their mills. Ultimately, it seems that the world never substantially changes its behavior no matter how many centuries pass.
 
Surely in some pristine moment, human geography of this planet was only comprised of small population groups who were self-sufficient and able to culturally define themselves with the milk given by Mother Nature. But the moment after, the ever-present antagonism of the "ying" and "yang" that motivates relations and causes instability in human groups so as to encourage change was present.  Predators arose to exert violence, discrimination and domination.  Entire villages disappeared; others were reduced to vile conditions and races were mixed to increase troops. This was followed by the Huns, the Romans or all the Hannibals that as they fell, only changed their names, while new more lethal weapons were developed and new strategies built up along the perimeter where the next predator threatened. New tensions arise, and with them, a new search for allies and sowing hatred necessary to frame the new enemy branded a "barbarian", "Saracen", "Nazi", "communist" or "extremist".

 

Since then, the concepts of "crisis", "war" and "change" have been constants in human evolution ... until the Second World War that divided our planet in just two halves and then the Cold War in which everything was bet on single card. Apparently a unified world had arrived without borders, with one official culture, a single currency and all, under a hegemonic leadership of a group of "elected" leaders who would impose "world peace".  Also, at this stage of the game, the concentration of military power was already fully defined, worldwide political management was en route and the only major remaining task was to unify financial power. "Globalization" was the universal panacea: global ownership in a few hands and everything under the control of a central privileged. The task would start with a strategic location: the Middle East. (Commenting on the sidelines, curiously, the past presidents of all American families come from bankers. Obama would be breaking that rule. Curiously also, the word "murder" is heard less often in the midst of the proverbial "war on terror"?. What type of fundamentalism will it be: racial, religious, political or...?).

This quest for global unity leads us to evoke the experience of Japan, after such a long historical period of being a "country at war", where the "warlords" were (literally) losing their heads along their respective domains or accepting vassalage.  Thus, Japan was transformed into a single geo-political unit in the hands of the 'shogun' of the Tokugawa clan for two and a half centuries from the seventeenth century on.  Additionally, it was isolated from the rest of the world to prevent unwanted contamination ('sakoku').  With unbridled power, they handled all the assets of the nation, rendered all its laws, imposed absolute peace and charted lifestyles strictly per nationalistic criteria.

 

They managed to deeply standardize thinking, feeling and the chores around the village but all of this on the basis of that other ancestral uniformity which had already rejected diversity. ("The nail that stands out get hammered.")

In this case, Japan was almost happy because it only really knew its own, single culture, its own, single language, perfectly compatible religions and a single all-encompassing tradition.  But, can this work in a kaleidoscopic world where disparities of all kinds prevail and confrontational readiness to defend these existential differences? Hasn’t Vietnam and Iraq yelled about this at the top of their lungs? Surely, therefore, that "globalization" slated to constitute the alleged "universal civilization" is feeling the pressure of emerging parallel power groups that are attempting "local globalizations" to build more effectively zones of identity, security and stability.  To this is added the tensions of the crisis in process that could help to open up gaps in unexpected directions, dramatically changing the final pages of the libretto of this last-minute melodrama in the history of the world.