"How hard can we laugh at this and still find coffee money in the morning? These are the geniuses who claim they have insured our deposits up the $250,000 each. The FDIC is bust. It didn't collect for ten years. The banks that are gone never paid their fees and are now draining the pool. And the same crew that crashed the airplane is now claiming it can take off again even though it is out of fuel, and they forgot to lay in a supply."
-- John Batchelor on Sheila Bair's assessment of where the FDIC is today.
John has a gorgeous new website that features a banner with ever-changing landscapes of Earth's twin, Titan. A good way to keep things in perspective while we're tearing our hair about the human tragicomedy in our patch of the galaxy.
Here's the rest of his post on the FDIC -- and us.
1 comment:
The root cause of the current economic turmoil may run much deeper than it appears. The evolution of commerce and other human constructs (i.e. political, social, cultural, law, military force, etc.) are descended from an a priori condition of scarcity. These systems of human interaction are attempts to counter the scarcity of material/life sustaining resources. Eventually these efforts codified into cultural and social customs that were later elaborated as governance. The objective, at the bottom of these systems, is to control, hoard, or parse out scarce resources.
The industrial revolution and the advent of large scale manufacturing disrupted this paradigm. For the first time material abundance became conceivable but not practical due to scale and technological constraint. In the modern age, global manufacturing output capacity is unprecedented. There is virtually no limit to what can be produced and distributed in a material sense. Scarcity is due to human action rather than manufacturing or technological constraint.
Unprecedented scale in output requires unprecedented consumption, and the financial resources to facilitate it. There are two ancillary effects however; one is the erosion of “value”. In scarcity environments, value is determined by supply and demand. In times of unprecedented output, it becomes more problematic. When shoes, for example, can be easily manufactured for every human on the planet, what is their value? It applies to technology as well; the power of computers is in inverse relationship to the cost and manufacturing increasingly powerful computers, in larger and larger volume has become evermore feasible. (A current attempt to restore computer value is to redefine it in terms of function rather than power; whether this delivers pricing power remains to be seen.) The other effect is on money itself.
Unprecedented output requires unprecedented access to capital for an ever increasing amount of the populace, (financially qualified or not, productive or not, taxpaying or not), to absorb rising output. Eventually the “process” of the exchange supplants the “value” of the exchange medium, especially with fiat currencies. The problem arises when the scarcity based system can no longer accommodate the increasing the frequent and arbitrary financial manipulations required to approach equilibrium in output and consumption. I suggest that we reached that point and anticipate a reset of the scarcity paradigm and it will be brutal for many.
The human mindset, because there is no precedent for an abundance scenario, is incapable of realizing that the historical notions of value (in both commodity and fiat currencies) become in abundance scenarios more perception based than actual. This is because supply and demand value metrics have gone out the window. Frankly, mass abundance threatens both the notion of privilege and power as it has been historically manifested.
Consider this; at the dawn of the 20th Century, Gorge Vanderbilt constructed a huge chateau in Asheville, NC complete with running hot and cold water, electricity, central heating, etc. Of course, he had have the enormous wealth to have it engineered, constructed, installed and maintain it as it was decidedly off the grid, in fact there was no grid.
Contrast that to today where, at least in the developed world, this is common, and in America, the “impoverished” have that and throw in a car, Internet, T.V. cell phone, AC, etc. This is not to be confused with equity in access or simple availability but is restricted to capability for this could become, as China and India are demonstrating, much more global.
Resistance to abundance has taken and is taking several paths. One is cultural as exemplified by Middle Eastern and tribal fanaticism. Another is global with the manifestation of various cults of eco-theism. Another is governmental as a populace that has become too autonomous is a threat. Financial collapse is of course, the latest and darn effective at that. In all these scenarios the outcome will be hyper regulation and rationing. In all areas there will be less availability, more cost; less activity across all spheres of human activity, in other words scarcity.
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