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Social Inertia
Sunday November 28th 2004, 10:29 pm
Filed under: General
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Hello. I’m John from down in San Jose. I tend to play free-form jazz with my words, so if I lose you — it’s my fault not yours. I’m quite good at structured, expository writing, but to hell with all that. These days, I just let my brain bounce and play with the cascading cadences of phantasmagorical phonemes. The old engine of invention likes the way sounds naturally find each other to make meaning and music. I don’t have any idea what this ‘blog’ will entail, but I’m sure I’ll figure it out along the way. So consider that a disclaimer.

These are extraordinary times. Consider the absurdity and significance of just the last six years.

In the mid to late 90s, we had a 20’s-style financial bubble that gave birth to one of the most impressive and vicious transfers of wealth in history. But underneath that financial roil, there was a revolution in the way we communicate and share information. Marshall McLuhan said that the media we use to communicate are extensions of our corporeal bodies. Print is an extension of the eye. Oral communication is an extension of the ear. Today’s electronic media is the extension of our central nervous system. The world just grew a spine–brave new world. McLuhan said that the era of electronic media will be the ‘retribalization of humankind’.

In 2001, the shell was broken further. America was born into the world of real, tangible consequences. The consequences of foreign policy were no longer hidden among the sand dunes and caves of countries the names of which we couldn’t pronounce. It was here. And it’s still here.

In 2003 we witnessed a massive transfer of wealth from the treasury of this country into the coffers of private concerns with direct ties to the ‘leaders’ of this nation. Can you spell “racketeering”? We saw tens of thousands of deaths and mutilations because of a “mistake”. We saw our ‘leadership’–the leaders of the strongest and wealthiest nation in human history–fall on its incompetent ass in front of the whole world. We broke a sovereign nation, and had absolutely no plan for the follow up.

And to top it all off, the nation re-elected the very people who got us all into this mess.

So here we are about to start 2005. Where are we? I’m bearish on the state of foreign affairs.

The Gorilla
Of course the 800 pound gorilla is Iraq. No it’s not going well. So what? The real danger as I see it is this: the domino theory. Remember that concept? It’s back. What our illustrious leaders did was exchange a two-bit, secular Stalinist dictator for a decentralized hydra of the world’s most calculated and unforgiving Islamic fundamentalists. No, Saddam had no reason to empower these people. They were in fact a bigger threat to his leadership then we were. But he sure kept them out of Iraq. Saddam wasn’t a nice guy, no. But now the security of Iraq is our responsibility, and we’re failing.

So what happens if these “Al Qaeda” (whatever the hell that means anymore) types take control of Iraq? We could see the entire Mid East collapse under a wave of revolutions and military coups, as these militant groups rally the poor, disenfranchised youth against the military dictators that the U.S. supports. Dominos fall and we are forced to pull our military back into Saudi Arabia to protect the oil. Let’s just hope the Pakistani nukes stay safe.

The Economy
The popular mantra today is that ‘our national debt is in a historically healthy ratio to our GDP’. Yes, pay no attention to the unprecedented amount of personal debt that Americans carry. Nor should we point out the social security and Medicare liabilities that–combined with our debt–lead us to 10s of trillions of dollars of liabilities. Pay no attention to the reports that Fannie Mae was caught buying trillions in mortgages without properly assessing the quality of those mortgages. You know who is responsible to bail out Fannie Mae is they go bust? We are. We would be on the hook for many times our total GDP.

So what? The bad word is deflation. That’s exactly what we DON’T want. Deflation leads to falling prices. Sounds good, eh? Well, it’s devastating. Deflation is the contraction of liquidity and basically grinds the economy to a halt. It happened before in the 30s and it could very well happen again. But most people are expecting–indeed joyfully expecting–inflation. Inflation is the increase of the money supply and dilution of the dollar leading to rising of prices. People who are in a lot of debt want inflation. Inflation makes their debt much smaller in terms of dollar value. $10,000 suddenly means a lot less than it used to. In this scenario, it’s better to owe then to lend. But ONLY if wages remain in lock step with inflation–they aren’t.

What would lead to deflation? A spike in interest rates could do it. What would case that? Right now, the American economy and operations are being financed by foreign lenders–Japan and China. Since we have a huge deficit, we need to borrow money to operate. Japan and China buy our treasuries and finance our country. Recently both Japan and China have been slowing down their purchasing significantly. America still needs to borrow extraordinary amounts of money to operate, but our lenders are getting tired. So how do we entice buyers of treasuries? Raise the yield. That would raise the interest rates throughout our labyrinth of debt finally landing square in the nuts of home buyers. You know all those people who are on multiple interest-only, variable rate mortgages? Let’s hope they can continue to make their payments, because massive default in the mortgage industry would lead to catastrophe. This is only one, very simplistic scenario. The reality of the situation is actually much more frightening.

So What?
Indeed, so what. Perhaps all those ‘fringe’ post-modern political science professors I had in college were right. The end of the nation state is near. Watch the deployments of “our” military. The military’s sole purpose now is to protect the interests of private oil concerns. From Colombia to the Caspian Sea to Iraq, the winds of a major war could be starting to blow. I read a story about investment bankers who are actually taking physical delivery of barrels of oil and storing them in warehouses. They are actually buying oil fields. This isn’t commodities speculation, this looks like preparation.

Fox News will not tell you this ahead of time. Neither will Air America. Indeed, the revolution will not be televised. We need to stop the adolescent partisan nonsense, and look at our real problems with an objective eye. I don’t trust our government. I don’t trust their competence. I don’t trust the judgment of the ‘American People’. I don’t trust Wall Street, and I don’t trust Wal*Mart. But I do trust social inertia. You can’t stop the natural order of things. Humans might be outgrowing the arbitrary ‘lines in the sand’ of the nation-state system. This is neither good nor bad–it just is. How will we adapt? Nature won’t wait for us to adapt. It will happen just as Hemingway described going broke–gradually, then suddenly.


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