One way to compensate for America’s broken connection to reality — our defective observation-orientation-decision-action loop (OODA loop) is to seek our different perspectives. In that light I recommend reading this excerpt from “The Wheels of Heaven Stop“, Eric Kraus, Truth and Beauty, 12 March 2009. For more information about these things see the links at the end. {Correction: the title originally described Kraus as an America; he is French}
The Twilight of The Neocons — Rush, we hardly knew ya…
The backlash against the Neocon power-grab is just beginning. The “Reagan revolution” is bankrupt. The United States is a democracy – and democracies do well to create at least the illusion of an equitable distribution of wealth. US government statistics show that earnings of the middle-classes actually regressed over the past “decade of prosperity” – whilst the richest segment of society indeed prospered as never before. As policy goes, this was both short-sighted and foolish. No matter how uneducated, manipulated or obtuse it may be, the populace will eventually realize what is being done to it and – when it has the means to rebel – will do so.
For the record, the failure was not of Capitalism, but with its abuse. Since the beginning of the 19th century, the advanced, industrialized countries have been moving towards some form of moderate Social Democracy, intended to combine the incentives of free market capitalism with some measure of social equity. Sharp deviations in either direction tend eventually to result in compensatory swings back in the other.
If T&B may venture a wild guess, it is that, by the beginning of Mr. Obama’s second term – i.e. well into Great Depression II, the body politic will be ready for some fairly radical policy measures. There is historic precedent – Roosevelt’s New Deal.
Flat Earth gets Rounder
The decline of the Post-War global political structure – which was based upon the overwhelming preponderance of the sole major power to exit the Second War not devastated but relatively strengthened – began not with a defeat but with a victory: the collapse of the Soviet Union. What was not clearly apprehended at the time was that history has no patience with monopolar political systems, and thus, that the collapse of the Communist Bloc signified the atomization of the erstwhile bi-polar world into a constellation of partially antagonistic powers and regions.
The post-war political system went hand in hand with a financial montage which, following the unilateral abrogation of the Bretton Woods system by Richard Nixon, ultimately allowed a single country to issue virtually unlimited quantities of the global reserve currency – scrip which could then be swapped for valuable goods and resources.
This system obviously represented the sort of temptation to which no man should be subject; abuse was certain – and abused it was. The end result was classical credit bubble terminating in an equally classic Minsky moment, although one of truly unprecedented proportions. The game is over. It is not coming back. …
Dragon Rising
The New Chinese Century is upon us far sooner than predicted; whilst such tectonic shifts begin almost imperceptibly, they are prone to sudden, terminal accelerations. Although the rate of increase in Chinese growth has decreased, the essential fact remains that China is the only major economy to be growing at all – and whilst their 8% growth target for 2009 may seem overly ambitious, before laughing it off the sceptics should ask themselves how they would have responded to a prediction that Chinese automobile sale would exceed American sales by 2009 (ed. they just did…).
Predictably, the Western media are replete with stories of how the Chinese model is set to fail – succumbing to social unrest, democratic deficits, bank failures, or the Chinese’ genetic inability to consume. Meanwhile, China remains the sole major economy to still enjoy substantial economic growth; similarly, having heard constant warnings of the impending failure of the Chinese banking system over the past decade, we would note that it is currently one of the precious few banking systems not threatened with implosion.
Likewise, the warnings of “social unrest”; T&B is no expert on Chinese sociology (in this, we are in very good company – including the vast majority of commentators who so recently reinvented themselves as China specialists…) and thus prefer not to issue terrible warnings regarding matters beyond our ken.
Our frequent travels in China suggest that the mechanisms for social control are particularly well honed, and that any popular protests tend to be quashed quite effectively. An uprising by the population of an entire province, Tibet, was brutally crushed in a matter of days. Despite the massive layoffs in the coastal manufacturing cities, as far as we can determine matters have remained remarkably quiet. Perhaps our scepticism may have something to do with the memory of how comically misguided proved to be the equally terrible warnings of the coming chaos in Russia in 1998.
The Dragon Resumes Smoking
… However painful it may be to our Western- (or alas, our Russian-) pride, if we are to be saved from the consequences of a generation of folly, it will be by China. The price to pay – and it will likely prove a painful one – will be the emergence of a new global hegemon.
Those who would still laugh off our views, continuing to assert the eternal ascendency of the West, must be somewhat uncomfortable with the spectre of America’s China-policy largely reduced to a heart-rending plea to the Chinese to continue buying US treasuries. China is the world’s number one creditor – the US the largest debtor. One would have to be delusional to imagine that this simple fact will be without influence upon the relative positions of the two countries. Cry Tibet.
Afterword
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For more information from the FM site
To read other articles about these things, see the FM reference page on the right side menu bar. Of esp interest are:
- About Financial crisis – what’s happening? how will this end?
- About End of the post-WWII geopolitical regime
Other posts with excerpts from Truth and Beauty:
- Truth and Beauty: on the collapse of the world’s other monetary zone, 28 July 2008
- Big changes loom before us; why are they invisible to most experts?, 29 July 2008
- Rumors of financial war: Russia vs. US, 22 September 2008
- The evil of socialism approaches!, 22 October 2008
- A free lesson from Russia: how to manage a banking crisis, 6 February 2009
Posts about China:
- Power shifts from West to East: the end of the post-WWII regime in the news, 20 December 2007
- What you probably do not know about China’s food crisis, 21 April 2008
- China becomes a super-power (geopolitical analysis need not be war-mongering), 9 July 2008
- Words to fear in the 21st century: Lǎo hǔ, lǎo hǔ, Lǎo hǔ, 14 July 2008
- “The changing balance of global financial power”, by Brad Setser, 22 August 2008
- The most important news of the month. Perhaps the year., 29 September 2008 — A warning from our #1 creditor.
Posts about America’s broken OODA loop:
- News from the Front: America’s military has mastered 4GW!, 2 September 2007
- The two tracks of discussion about the Iraq War, never intersecting, 10 November 2007
- Diagnosing the eagle, chapter I — the housing bust, 6 December 2007
- Another cycle down the Defense Death Spiral, 30 January 2008
- Quote of the day: this is America’s geopolitical strategy in action, 26 February 2008
- What do blogs do for America?, 26 February 2008
- Everything written about the economic crisis overlooks its true nature, 24 February 2009
- The housing crisis allows America to look in the mirror. What do we see?, 9 March 2009
- Globalization and free trade – wonders of a past era, now enemies of America, 16 March 2009
- A note on the green religion, one of the growth industries in America, 17 March 2009