Remembering John Galt

Pondering two things: 1. that it’s the middle classes who are going to suffer the most in this economic downturn, ie all those whose wealth is primarily based on paper/electronic memory. Those who have actual title to land, and those who have marketable (practical) skills, will get through. 2. Those middle classes have not just not (necessarily) done anything wrong, they will, in fact, often be those who have actually done things ‘right’ – they are the ones who have saved/ got proper mortgages/ invested ‘wisely’ – been virtuous – and so on. So there will be rather a lot of righteous anger coming from that quarter before too long (weren’t these the people that voted for the NSDAP?)

But that also got me reflecting on a scene from Atlas Shrugged – a profoundly flawed book, but fascinating and not without insight – when the authorities have come to John Galt to force him to rescue the system. They rig him to an electrical generator in order to torture him, but when it fails Galt is the only person who can repair it…

Rorschach: “The world will look up and shout ‘Save us!’ And I’ll whisper ‘No’.”

What if all the alternatives fail?

First a good video which I originally watched at Justin’s place, tho’ it has done the rounds since then.

The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo.

This post is really for Alex so that he can parade the size of his economic little finger (grin).

Some propositions for discussion:
a) the great majority of banks are radically insolvent;
b) the extent of the insolvency dwarfs the assets of the governing class (including nations);
c) all attempts to keep insolvent banks afloat will fail – the only question is about how much of our money is destroyed trying to keep them afloat;
d) the way things are going, the authorities will _probably_ end up inflating their way out of the crisis (‘quantitative easing’) – we’ll have a deflationary moment and then a sustained period of inflation, which will lead to the middle classes being wiped out; those that survive will be those that have access to either land (including being mortgage-free) or tradable skills (and most white-collar skills are not tradable);
e) the attempt to keep things going is immoral as it punishes the virtuous and rewards the vicious;
f) the status quo ante is gone, vanished, kaput. It is Obama’s failure to grapple with this – symbolised by his appointment of various corrupt and shady establishment figures – that is the most ominous thing in the world scene at the moment.

(Actually, that last is hyperbole. The implosion of Pakistan and the forthcoming implosion of Mexico are much more serious. I still think that the financial crisis is overemphasised!)

Some places that predicted the financial crisis

Just for the record, there were several places that predicted the present economic crisis, starting from a point many years ago. Some just in general terms, but some in very specific terms. These are some of the ones that I read, but I’m sure there are others.

Nouriel Roubini
Financial Armageddon
The Automatic Earth
Clusterf**k Nation
Global Guerrillas
Club Orlov
Ann Pettifor
And, in general terms (eg here) yours truly.

So when someone in the mainstream media (or Gordon Brown) says ‘nobody predicted this’ you’ll be able to say that actually, people did predict it, it was foreseeable, it’s just that you’re incompetent…