The Economic Collapse For Dummies + Trade Off: a study in global systemic collapse

[stockholmer]

If last week's 74-page all-encompassing thesis on "how 'everything' is interconnected and headed for 'complete systemic disintegration'" is a little too much, here is a 10 minute clip that ties together all the loose ends of the reality bubbling just beneath the veneer of hope that so many call our markets.

A spectacular gathering of all things bearish that provides everything you wanted to know about the inevitability of a major economic collapse but were afraid to ask: a little too doom and gloomish perhaps, but sadly that does not make it improbable, especially in the current environment where the central planners keep doing the same over and over, hoping that just once "this time will be different." From demographic trends, over-leveraging, corporate profit extremes, deflationary impacts, and hyperinflationary reflexivity- there's a little here for everyone on a warm Saturday afternoon.

Beyond the epic first two minutes of Tice and Dent battling it out for doomiest of all, the thesis gets going...


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Trade Off: Financial system supply-chain cross contagion – a study in global systemic collapse

http://www.feasta.org/2012/06/17/trade-off-financial-system-supply-chain-cross-contagion-a-study-in-global-systemic-collapse/

This new study explores the implications of a major financial crisis for the supply-chains that feed us, keep production running and maintain our critical infrastructure. I use a scenario involving the collapse of the Eurozone to show that increasing socio-economic complexity could rapidly spread irretrievable supply-chain failure across the world.

Read the paper (PDF, 1 MB)

Overview

This study considers the relationship between a global systemic banking, monetary and solvency crisis and its implications for the real-time flow of goods and services in the globalised economy. It outlines how contagion in the financial system could set off semi-autonomous contagion in supply-chains globally, even where buyers and sellers are linked by solvency, sound money and bank intermediation. The cross-contagion between the financial system and trade/production networks is mutually reinforcing.

It is argued that in order to understand systemic risk in the globalised economy, account must be taken of how growing complexity (interconnectedness, interdependence and the speed of processes), the de-localisation of production and concentration within key pillars of the globalised economy have magnified global vulnerability and opened up the possibility of a rapid and large-scale collapse. ‘Collapse’ in this sense means the irreversible loss of socio-economic complexity which fundamentally transforms the nature of the economy. These crucial issues have not been recognised by policy-makers nor are they reflected in economic thinking or modelling.

As the globalised economy has become more complex and ever faster (for example, Just-in-Time logistics), the ability of the real economy to pick up and globally transmit supply-chain failure, and then contagion, has become greater and potentially more devastating in its impacts. In a more complex and interdependent economy, fewer failures are required to transmit cascading failure through socio-economic systems. In addition, we have normalised massive increases in the complex conditionality that underpins modern societies and our welfare. Thus we have problems seeing, never mind planning for such eventualities, while the risk of them occurring has increased significantly. The most powerful primary cause of such an event would be a large-scale financial shock initially centring on some of the most complex and trade central parts of the globalised economy.

snip

[Iggy]

1. Uber Wealthy Hiding at Least $21 Trillion World Wide... Weak

just me or is there something very wrong here?

A global super-rich elite had at least $21 trillion (£13tn) hidden in secret tax havens by the end of 2010, according to a major study.

The figure is equivalent to the size of the US and Japanese economies combined.

The Price of Offshore Revisited was written by James Henry, a former chief economist at the consultancy McKinsey, for by the Tax Justice Network.

Tax expert and UK government adviser John Whiting said he was sceptical that the amount hidden was so large.

Mr Whiting, director of the Office of Tax Simplification, said: "There clearly are some significant amounts hidden away, but if it really is that size what is being done with it all?"

Mr Henry said his $21tn is actually a conservative figure and the true scale could be $32tn. A trillion is 1,000 billion.

Mr Henry used data from the Bank of International Settlements, International Monetary Fund, World Bank, and national governments.

His study deals only with financial wealth deposited in bank and investment accounts, and not other assets such as property and yachts.

The report comes amid growing public and political concern about tax avoidance and evasion. Some authorities, including in Germany, have even paid for information on alleged tax evaders stolen from banks.

let me guess.. their corporations need _more_ tax breaks?

http://www.bbc.co.uk/news/business-18944097

[Gregorian]

2. Natural resources per capita.

Doesn't that sum it up?

[Quantess]

3. The background music was too loud.

It was too distracting to sit through.

[Merlot]

4. I couldn't finish it either. Melodramatic music, cheesy graphics and faux news talking heads

claim the gov't stimulus wouldn't work. I stopped at the premise that the baby bloomers where the ones to blame for the collapse because they would stop pending money between 50 and death.

There's nothing here but talking heads. No analysis, no facts, just hyperbole.

[JDPriestly]

5. Identifies the demographic factors and what they will mean, but fails to

recognize that as the boomers end their childrearing years and retire, their needs will diminish -- lowering the amount of money they need to live. Older people even eat less than younger people. They travel less (with exceptions). They move less quickly. They are happy with less.

Social Security and Medicare will not be the problem in the future. Maintaining our military expenditures will be. an aging nation is unlikely to be willing to take less in their Social Security and Medicare in order to maintain an outsized and unnecessary military presence that sits in nearly every country in the world or stands watch at the borders of nearly every country in the world.

The video does not take into account the likely effects of climate change. It hypothesizes a world in which the necessities of life like food and water are as easily obtained (for a price) in the future as they are now. It also seems to hypothesize stability in the size and age distribution in the population.

Should we suffer continued drought, severe weather and bad harvests, we could experience a decline in our population. Also, should the economy get as bad as this video predicts, it is unlikely that we will escape social disruption of various kinds including emigrations and perhaps even more disruption in families and communities than we now know.

The idea that obtaining gold and silver in a crisis of the dimension the video describes is kind of absurd. I remember what an elderly woman in Austria told me about her experience after the war. She said that no one had anything. Food, fuel, building materials, housing, everything was scarce. She had an attic full of old clothes that she had never thrown away, and she knew how to sew. She said she survived because she could alter the clothes to fit people and sell them. That was her ticket to having enough to get by. Her advice to me was don't every throw or give any clothes away. You never know when you might need them to survive.

When the economy really gets bad, people want the most important things. Gold and silver are desired by the rich, and they can be useful in currency crises -- but a starving man will trade a lot of gold (if he has it) for just a bit of food.

You really cannot predict what you should do to prepare for an economic crisis of great magnitude. Because you cannot predict how the crisis will be set off or what your situation, your personal situation will be at the time. In WWII, the farmers who had lived hard lives up in the mountains were actually better off than people living in prosperous cities. The bombs were mostly falling in the cities, not so much in the mountains.

Someone who lives a very simple life and seems poor in prosperous times may be precisely the person with the abilities and commodities that are needed in difficult times. The man who was rich may become poor, and vice versa. But to jump to conclusions about mining stocks based on these economic predictions is pretty foolish in my book.

[mmonk]

6. I disagree with the premise.

It's Austrian economic apologists trying to explain why their predictions have failed and claiming they will eventually be proven right. But it's their philosophies that have driven the lack of demand.