The Greek Experience

This past week or so has seen some telling events around the globe that are worth watching in light of the Grand Thesis of this blog.  Almost simultaneously was the death of King Abdullah in Saudi Arabia and the deposition of Yemeni President Sadi by a Shiite faction named for their leader, Abdulmalik Houthi.  The third event is the election of Alexis Tsipras of the Syriza party as Prime Minister of Greece, to the utter dread of European financial elites.  What happens next is anybody's guess, it's why we play the games after all, but my interest lies in not only what it portends but what it says about how contemporary politics shake out ideologically in a society under duress.

That Greece is under duress is certainly beyond dispute.  With a 25% unemployment rate, with nearly 60% of Greeks aged 18-24 unemployed, AND with half of all Greeks living below the poverty line, "under duress" seems like a nice way to put it.  At issue now is the Greek public debt and the austerity program imposed on it by creditors that has not enabled Greece to do anything but suffer under a form of national debt peonage.  Greek membership with the EU and whether or not it will or should be continued is the major question Greek political parties now arrange all their positions around, and 36% of them went with the radical left coalition of parties that make up SYRIZA. 

Greece has, like virtually every parliamentary system, a pretty healthy list of political parties.  The two dominant parties since World War II have been the New Democracy center-right party and Pasok on the center-left.  Syriza, as a coalition of Marxists, Leninists, Trotskyites, Greens, and Socialists, won at the expense of Pasok, which only took about 3%.  The results of the election are in the chart below and show an interesting admixture of new and old parties with both left and right radicals gaining against the old regime of Pasok and New Democracy.  The emboldened radicals can be generally classified into Marxist, or Marxian, and Nationalist/Patriotic camps with a decidedly anti-Neoliberal platform as represented by New Democracy.  Golden Dawn, the only neo-Nazi party on the ballet, won almost 6% despite the inconvenience of having its candidate in prison for business fraud (most certainly a trumped up charge).  This last is instructive of how blinkered societies under duress can get when it comes to voting.

A lot of characters of the alphabet have been used lately on what the implications of this election could be, and I personally don't have a strong view on the relative strength of all the possibilities, but ripples in the fabric of the West will be felt.  The size of the ripples and how strong the ripple effect is depends on at least two main considerations.  One is miscalculation of the impacts of a Greek exit from the Euro zone, or from it's currency, and how financial markets deal with that.  The other is the direct financial impacts of a credit write down by western financiers of Greek debt, if that were to occur, and how many other debt addled states like Italy or Spain would expect the same sort of arrangement if it does occur.  One thing is clear, though, in considering all of this is that Greece can in no way pay the debt it owes to Western banks.  Something will give here and it matters a lot who or what gives. 

But I would consider this election to be a preview of what is to come.  The broad parameters of the left/right split in Greece is not terribly different from other nations, in Europe especially but even in the U.S., in terms of ideological perspectives that are employed.  Greece is, of course, at the breaking point, but other nations aren't so far behind them.  In the event of a deep recession, or even the slow bleeding of the current conditions of near zero growth and falling prices, eventually other nations will be forced to default or to negotiate a substantial debt forgiveness.  Whatever the case, somebody pays, and it would be the lenders in the form of the world's largest banks in conjunction with the governments and central banks of the rich economies (read Germany, US, UK, etc.). 

This very readily fits into the broadly defined left wing narrative based on Marxian/liberal analysis.  The notion of class struggle as described by Marx can be easily overlaid on the current situation that the Greek case exemplifies.  In other words, it is believable for a desperate polity.  In a Marxian political platform there is a whole lot of hope that can be applied, as is the case with the promise(s) of Tsipras in Greece, of a new era of fairness and equitable distribution of wealth that can form the basis of a just and peaceful society.  He has no stated intention or desire to leave the European Union,  He also has not stated anything like I have said in this blog about economic growth for industrial capitalism having come to an end.  Nor does he say anything about resource depletion and a need to reduce consumption.  So Greece is holding on to hope that a return to the benefits of EU membership can be had again at some point once the debt overhang problem is resolved.  But the EU itself is one strained beast and desperate in its own way on a much bigger scale.

This is where nationalism enters the picture, and the logic of it fits a likely narrative of the future when the scale of human systems shrinks.  Nationalism is exclusionary by definition and so is willing to shut out the don't haves.  It's parameters are bounded by socio-cultural markers of relatedness.  That it has an ugly past, what with Fascism and Nazism, is well known, but it actually sprang from the Romanticism of the 19th century and informed much of the artistic expressions in music, painting, and literature of the time.  The story of how a self absorbed, non-other-people-hating 19th century composer crafting delightful melodies based on folk melodies of his home country turned into the most violent and atrocity filled conflict in human history is a very long one, but it happened.  As a consequence, nationalism has been a dirty word since the end of World War II.  And it's no wonder that it has, but really nationalism has been just a manifestation of an innate human tendency to positively identify with a group of people you didn't choose to be a member of, and the survival of which your own is heavily dependent on.

So the political lines of the present and extending into the future I see as a battle between the class struggle revolutionary and universalist model of Marxism and the circle the wagons fuck the other guy tendencies of some new form of Nationalism.  The ability of a democracy to encompass these tendencies will be severely tested once the growth model has proven not to work.  The Greek experience is a test run of how this could conceivably unfold.  People around the world are looking for different ways of doing things and they tend to use more well worn paths in choosing radical alternatives.  There are certainly other possible ways, and in this I am decidedly more on the left, but presenting dubious green-growth models of a high tech future does not feel correct.  And nobody, not even or especially the Greeks, want to contemplate having something less than what they already have based on a notion that they have too much.  Therein lies the rub.

The Stravinsky Principle

As 2015 chugs along with all of its promise and peril, I think many conceptions of how this thing called civilization actually works will be under scrutiny.  The most important civilization for everyone involved is the American-led Western civilization as it winds down as a going concern.  There are many layers to consider even in just describing the functioning parts of the current civilization and it will take some time for the culture to find the means to explain why things are happening the way they are.  In this circumstance, like many others in life, creativity is an available mental tool that can and will be employed.

The question of how that creativity is employed is a good one to ask.  Quality matters here and I suspect that a number of principles currently relied upon by the culture will be either outright thrown away or seriously (hopefully) reconsidered.  What replaces these abandoned notions will spring from the understanding and interpretation of events applied to our individual and collective actions.  Ideally, actions have thoughts attached to them, and it is the thoughts I want to address and, more specifically, how those thoughts are formed.

So, if a creative, imaginative response to the ongoing, staged crises of civilization is to successfully minimize and contain the likely stupidities people will generally engage in, like, say...violence, it will have to begin with the individual mind.  A good individual mind to start with on the subject, truly, of creativity is that of Igor Stravinsky, if for no other reason than I know a little something about it.  In "Poetics of Music", a series of lectures he gave at Harvard University in 1939-40, he describes his observations made on the workings of his individual creative imagination.  He is, of course, the only witness to this process.  What makes it interesting is that he is a good observer, something he believes all good artists are and need to be.

In this sense, what's good for the artist is good for everybody.  A good artist renders a faithful version of reality.  Faithful to the subjective view of reality, that is, but still has to be set against real reality, however you want to look at that.  But observation as a necessary component to being a good artist also means depth of observation and not contenting oneself with the frivolous or fantastical.  Of course, that, too, is a subjective judgement, and rather than embark on some philosophical journey into the heart of the reality question, Stravinsky's observations of the workings of his own mind I think has to be considered truthfully rendered.  So what am I talking about?

It is the blank page problem for the writer, the block of stone problem for the sculptor, or any other condition of absolute freedom that, in truth according to Stravinsky, is paralyzing for an artist.  At least, that is Stravinsky's understanding.  He is pointing to a common misconception, even in his day, about what an artist truly does and faces in the use of the creative imagination.  For those who are not artists, the misconception lies in the sense that artists do whatever they want to do in absolute freedom.  This is the paralyzing condition and not the condition which allows for, in Stravinsky's case, a ballet to be invented.  This happens through imposing limits, or recognizing the limits of the form.  In music it's useful to limit yourself to a scale or a key and discover that within this constraint at least one can begin to create and discover the inexhaustible possibilities even a simple seven note scale offers.

But to create means to impose, or to realize, a progressive series of limitations on the work and ultimately is what distinguishes the work from incoherence or chaos.  In contemporary America, I suggest there's something to learn from this.  We here have an incoherent and overly democratized ideal of what creativity means and how it functions in the mind and in the culture.  In other words, creativity is a word largely functioning without a clear meaning, having been degraded by marketing campaigns based on "innovation" and "creative solutions made easy" to cover everything from office supplies to child rearing to portfolio management.  Underlying this is a message of limitless potential for the individual and society.  Anything is possible, and don't even talk about constraints.  Against this is a backdrop of national misdirection and incoherence regarding our own state of affairs and even who we are as a people. 

The misconception of the popular notion of creativity is echoed in the general use of the word freedom.  There are two primary sources for the misconception of what we think of as freedom in our public understanding.  The first I think emerged from the intellectual leftovers from the Blank Slate conception of the human mind coming out of mainly the political left and embodied in the now largely defunct nature/nurture argument. The left took the nurture side which I summarize, not too simplistically, as meaning a child's mind can be, given the proper environment, infinitely elastic and that each child has an equal opportunity to be whatever he or she determines if raised accordingly.  Given enough Baby Mozart, well, each child can be a Mozart?  How about a Stravinsky?

This may sound like a gross oversimplification, but I am stating it's ultimate implication.  In practice, of course, it never works that way and most people see this.  But why?  In terms of a broad based public discourse charged with ideological implications, it is what I call, as of about an hour ago, an eroded binary*.  I think this is a good name and what I mean by it is that, in the course of defending one position or the other, the limitations of each view are exposed.  Not to mention that new research has defeated the primacy of one over the other.  Neither is wrong, but neither is correct.  The memo, however, takes some time to be delivered to everybody.  The problem is, the true mechanism girding all the feedback loops between the human brain and the environment it lives in is a terribly complex research activity and many more billions of dollars would need to be spent to figure it all out.  Maybe Lamar Smith (R-Tx.) has a burning passion to get to the bottom of it.

Stravinsky's description of the workings of his own brain jives more with the latest brain research than the Blank Slate.  He does not consider himself free to do what he does, but instead is fortunate to be free to be what he is.  It's out of compulsion that he composes, and many, many artists (artisans?) say the same thing.  For that matter, so do so many others who sit at the top of their fields, and even some who don't.  From this angle, we make allowances in our lives, make decisions according to what we are in the first place driven by an internal force we don't really control.  What is that force?  Stravinsky called it a compulsion.  We don't all feel compulsion probably in the same way he did, but we all have our own respective interests in something.

Another majorly confused notion of freedom is emitted from the imaginary and rather adolescent view of political freedom coming from both the libertarian and the constitutional fundamentalist perspective of the right wing.  This is what's called negative freedom, or freedom from something, i.e. government.  Where ever adherents to this way of thinking believe humans are or should be going, they posit an ahistoric, idealized place ruled almost purely by market principles and laws around private property.  That they have no sensible answer to why government in any form is a feature pervasive throughout human history is enough to cast it as a medium brow attempt at a comprehensive philosophy.  What they don't include in their world actually accounts for much of what constitutes the world.

These two can ironically be traced to the same person in it's origin, John Locke.  Locke devised the Blank Slate in his epistemology, or study on the way the mind learns.  This seems to be the state of paralysis Stravinsky described, eh?  On a blank slate slate can be written anything.  Who does the writing in this instance?   The private property fetish of the right wing springs from Locke, as well, whose philosophy hugely informed the founding fathers.  Private property is the basis of individual freedom, says Locke.  All well and good, but the fight between Marx and Locke has the same eroded binary effect on the national conversation that the Blank Slate has.

In order for there to be a rejuvenated cultural creativity these arguments have to be superseded.  How that happens who knows but I would start with the possible informed by a realistic notion of limitations on what is possible.  A lot can be done with that in mind, even if it's not fully understood.  That's a part of the creative process, after all, trying to find the possible.  What is sorely needed in the U.S., and what I think should inform our actions is the re-establishment of artisan traditions.  What is a hobby now could well become the job of the future.  People's hobbies and amateur efforts reveal something in line with who they really are in the Stravinsky sense.  The path to happiness is paved with those stones.  In the face of declining world trade, and the high cost of globalization can no longer be covered, economies will have no other option than to re-localize.  This means smaller scale production to replace all the stuff, crap, and junk we buy at retail stores or on the internet.  Now is the time, while there still is time, and, well, there still is time, to be creative in this regard.

Because, as the Minutemen understood so well, these things do take time.  So I will leave you with d. boon's authoritative tenor on the subject.

*  The bathroom shower is a great place to think.

And Then This Happens.

Well, we're only 16 days into 2015 and it's already proving to be a humdinger.  Market volatility is pretty intense with daily market moves exceeding 1% almost every day, all but one it looks.  Oil keeps dropping, rising, dropping in big swings, and now there is a flight to safety into treasuries because people are afraid.  When I talked about Godzilla moments to look for in 2015, I guess I forgot to mention Switzerland.  It seems everybody else forgot to mention Switzerland as well, judging from headlines, for the Swiss National Bank just pulled a fast one on the Market, providing investors with a nice little wtf? moment.

But it looks like the SNB move is not quite a big enough stick to poke Godzilla to wakefulness.  He may be scratching his side, or rubbing his nose, or somehow reacting to whatever part of his body was poked, but he is not awake.  Regardless of his status, what the SNB did is instructive, and it would bode us well to glean some appropriate lessons from this move.

First of all, the move.  For four years the SNB has peg the Swiss franc to the value of the Euro.  Currency pegs are commonly used for the purpose of stabilizing exchange rates to smooth out import and export markets.  The peg is achieved through bond purchases so that the pegger can regulate the flow of money into and out of the country.  For example, China has pegged the yuan to the dollar for only Godzilla knows how long.  The Swiss pegged the franc to the euro to keep the value of the franc from rising so that its exports (watches, pocket knives, and chocolate) would be more competitive.  But there's more to it.  In Switzerland, Godzilla has a different name, and that name is Deflation.  The Swiss held the value artificially low compared to the euro so that prices in francs would stay high, thereby keeping asset values, like a house or stock portfolio, high.  Now the prices of those assets are plummeting throughout Swiss markets as the value of the franc rises.

The U.S. Federal Reserve did essentially the same thing, only less so.  Even Japan didn't out-QE the Swiss.  The battle of the currencies has been an ongoing feature of the global economy since 2008 as nations sought to defend their exports.  The U.S., with the recent discontinuation of the formal bond purchasing known as QE, has caused the value of the dollar to rise against other major currencies.  Now there is an anticipated raising of the prime interest rate in the U.S. by the Federal Reserve with the announced date being sometime midyear, which would cause the dollar to go up even further.  Whether that happens or not is anybody's guess, it is up to the Fed after all, but a rate rise is to be perceived as a message of strength and hope that the U.S. economy is truly on the mend.  This notion isn't entirely without justification if you look at the numbers, but there is, naturally, more to the story.

This other part of the story is deflation.  Deflation has been bought off through the various burnt offerings dished up and out by the Fed and other central banks, to the tune of $16 trillion dollars.  $16 trillion dollars is an interesting number.  It is roughly equal to the entire U.S. GDP.  It is also roughly equivalent in percentage terms to the amount the SNB has relative to Swiss GDP.  The SNB has $400 billion booked on the balance sheet, which amounts to 85% of GDP.  Is this 85% of GDP a magic number signifying the upper limits to QE?  Does global QE still have $40-odd trillion left to go before central banks have to collectively pull out?   These probably aren't the right questions.

These numbers show how tenacious the deflationary force is throughout the entire global economy.  It's taken the equivalent of the American GDP over five years to stabilize markets and to keep them from selling off everything they own.  We can thank Ben Bernanke for that, and I'm being somewhat sincere in saying that.  But as they, or They, say, there's no free lunch.  Somebody pays, and in this case it is the future that pays.  But, as we all know, the future becomes the present.  The future has become painfully the present in Switzerland, and migrating towards Europe, who will have to respond in short order.  The concern is that the future might be too expensive.  In fact, that could serve as a subtitle for this blog:  The Future is too Expensive.  And this gets me to what some in the media are saying about this.

The video below is from "Bloomberg Surveillance" on Bloomberg TV and the guests are Robert Albertson and Drew Matus, two fellas I didn't know existed until this morning.  They are both market creatures and live their market beliefs through their jobs.  The questions, answers, and statements here are packed with significance.  Everything they say says a lot about the situation and their own assumptions regarding what is and what should be.  Underlying it all, of course, is the problem of economic growth, that which cannot be allowed to falter.  Being good market people, they blame QE and government intervention as the primary, and only, barrier to achieving economic growth.  "It (QE) doesn't work", they proclaim, without stating clearly what QE is not working to do.  But that is just one of many points which could be made about the interview.  Here's the vid:

 Bloomberg Surveillance

There's too much that I'd like to comment on, so I'll be self-limiting.  Two observations, though, will satisfy me for now.  The first is that Albertson and Matus, when giving their perspectives on employment, contradicted each other.  Albertson said at the opening in his assessment of the effectiveness of QE cited labor force participation to support his judgement of QE.  His statement was accurate.  Labor force participation is indeed down to levels last seen in the early 80's.  Matus, in defending his position that U.S. interest rates should rise cited the unemployment rate which does not count people who have left the labor force.  The difference between them is great and begs the question of their value as statistics.  A low unemployment rate can justify all sorts of policy decisions, but the labor force participation rate says the U.S. economy has not recovered at all in terms of employment since 2008.

The other observation I had was about a minute into the video when Matus talked of normal investor behavior and normal central bank behavior.  He is talking about the Fed's interest rate, which is forever important to talk about.  During the clip he uses some form of the word "normal" three times.  This is his bias.  He believes in a normal growth rate for any economy that is unfettered, period.  A foundation for market fundamentalists is that, if one allows price discovery, the market will correct itself.  As a consequence of this belief, he advises, or would advise any government who asked for advice from him, to end government supports.  The question that naturally follows is:  What would happen?

The blindness for people who think this way comes from a lack of appreciation for the power of deflation.  The Swiss event gives us the picture.  Absent QE or other government support for the economy, the market would scream "get rid of money!".  This happens to be the same thing as saying "get rid of debt!".  One exclamation sounds horrifically undesirable, something no sane person would ever say.  The other is perfectly reasonable, even admirable, to say.  How can they be the same thing?  It is because money is credit.  Stop borrowing and watch the economy spiral down the toilet.  Ben Bernanke understood at least that, which is why he ratcheted up the Fed's balance sheet, saving the economy from a slow grind global depression.  A depression is a place from which money has taken a vacation.  So these investor's, if they get what they wish for, would soon find out they have no money to invest.  This is not a radical notion, because any historical view of the economy can only lead to the conclusion that depressions are normal, if infrequent.  The abnormal has been the very period in which the government has been most involved in the economy, namely, the post-War period.

A depression is probably like what Switzerland has entered into.  Switzerland is a small country with a small GDP.  It also happens to be a thoroughly connected country in the global banking system with an importance far beyond what its size would suggest.  Nevertheless, it appears containable.  We shall see, of course.  But what it gives us a glimpse into is the matrix of how the global economy operates and why it is struggling.  No market fixes are gonna fix it.  It is something that needs to be managed on the way down.  With QE we bought time.  We used the time to prop up a failing system.  Nothing has been done to address it during this time.  Now the problem is worse.

In the end, it's misleading to call it a problem.  The Swiss National Bank was faced with a dilemma.  They couldn't keep going and they couldn't stop.  However, they had to make a decision.  Either way a disaster was bound to occur.  They chose one way.  Really, the only way if they were to salvage anything from the future.  So, the lesson I take from this is that trust in a powerful institution has been seriously damaged.  Trust in institutions is the necessary precondition for functioning markets.  That is the story to watch.

The Real Godzilla

One of the funnest and most endearing features of the human mind is the imagination.  It alone, as an extension of the ability to abstract, makes the human mind a flexible instrument of survival which enabled us to out-compete every other species over the millennia.  We also derive pleasure in the exercise of the imagination in art, drama, music, myth, religion, etc. which help make the world comprehensible and fortify the psyche against the uncertainties of life and the certainty of death.   But the imagination is also a tool for rational thought, and in this way, science and math have in their making an imaginative component.  The reason is because the imagination allows us to devise a probability to expound on and to then intuit a possible explanation.  The rational proof comes after this.

There is a feedback loop in the brain which you could call learning.  Rational thinking becomes the bedrock for the intuition and feeds the imagination.  If rational thinking fails to inform the imagination the outcome is a badly conceived version of reality and the intuition fails to anticipate real world events.  Without good information the imagination becomes just a means for escape, which, to be fair, serves a psychological purpose as well.  But escapism comes out of either a lack of control and/or a lack of knowledge, both enduring conditions of life.  Then Godzilla shows up periodically and wrecks everything, forcing people to turn from escapism to actual escape.

Godzilla, in this case, represents the collective worry at the pretty reliable appearance of disaster.  Godzilla is an extreme case of this, to be sure, but has its origin in real life experience which makes his popularity understandable.  It's best to look at Godzilla as an industrial myth.  He is a god of destruction born of the advent of nuclear weapons.  The first Godzilla movie was released in 1954 and his manner of pulverizing Japanese cities reflected the then recent experience of the atomic bombing of Nagasaki and Hiroshima.  Over the decades the Japanese people have learned to live with fictional Godzilla ever looming, as they have had to with the actual disaster which inspired his creation. 

For the average Japanese, the atomic bombing was a random event.  It was as random as an earthquake or a tsunami.  This is the type of disaster, different as they are, that is expressed through Godzilla.  But the atomic bomb attack wasn't random.  Japan was warned beforehand and given an ultimatum, but the average citizen had neither control nor information that it was coming and therefore it appeared random.  This is a crucial difference.  Everything has a cause but the cause isn't necessarily known.  One of the benefits of the modern world is that the knowledge of the workings of the natural world gives at least an explanation for things without recourse to the supernatural.  But a key difference lies in the origin of the disaster.  The nuclear disaster embodied in the Godzilla myth is of human origin.

What humanity confronts now is the prospect of systemic failure.  This comes in two related forms.  One is what could be called the biophysical system, or the natural system of life on Earth.  The other is global civilization, or the interconnected human system of nations, economies, and culture.  Civilization is just a part of the biophysical system and emerged from it via the human mind.  Both of these systems are stressed, and when systems are stressed they risk failure.  A systems failure in this sense means a fundamental reordering of the dynamics of the system.  This all sounds clinical and innocuous compared to failure, but failure is in the eye of the beholder.  An earthquake isn't a failure, but it can cause failure of the human system that is affected.

So systems that depend on the stability of a wider system experience failure when the wider system fails.  This is the primary concern of climate change.  Adding heat energy to the climate system changes the dynamics of it.  Looking at past climate records it's easy to see that there have been long unstable periods lasting tens of thousands of years which had a number of different causes.  In fact, it's apparent that the contemporary climate, such as it is, has been a remarkably stable period, and it is likely not an accident that, after many, many thousands of years of climatic instability, human civilization was only able to thrive during this time.  Call it luck that it even happened at all and I can be sitting here looking at my computer screen.  With all that, though, climate is just one aspect of the biophysical system that is under duress.  Other aspects are likely to impact civilization before shifting climate does.

The question for the purpose of this blog post is what can be known about the nature of the particular broad based disaster people should be on the lookout for.  For starters, it's important to distinguish between data and information.  Information is useful to the brain, data is not.  Data has to be interpreted.  Additionally, not all information is equal.  Some of it is bad.  Knowing the difference between useful and not useful information takes a lot of effort.  Having a frame, a hypothesis, theory, or whatever fits the bill is necessary.  Doing this allows you to form a perspective and to compare the perspective to events.  Perspectives can change.  Looking at current events through the lens of a well-conceived perspective also allows you to interpret these events.

Developing a perspective is as much a matter of determining what isn't important as what is.  It's like sculpting a statue in this way.  It's all the stone you remove that makes the shape of the statue.  Removing absurdities from your perspective is like removing stone to form a statue.  A few starter absurdities from my own perspective are:  The economy will grow forever; the future will look like the past except better; the Earth is an infinite capacity dumpster.  This leads me to a wider perspective:  That which is not sustainable won't be sustained.  These all can fit into the points I made above about the two systems.  The human system of civilization is stressing the biophysical system it depends on and threatens to disrupt and cause both of them to fail.  How is it possible to tell whether it will fail or not?  Maybe it will only partially fail.  Maybe it won't at all and I'm just a Nervous Nelly.

To the last I say:  Read the signs.  It may come down to the fact that I trust scientific inquiry more than I trust economists and politicians.  Or oil executives.  Or maybe the more intuitive approach that begins with "infinite growth is not possible on a finite planet" accurately frames a predicament humans collectively face.  It's about reading the signs.  It may not be possible to know when Godzilla will show up (and really, he won't show up because he is fictional) but that it's possible to know when a system, or interconnected systems, is destined to fail.  The stress on these systems is well documented and the cause is understood.  It comes from the way we live. 


As an addendum, in the spirit of annual New Year predictions,  I will make a few of my own.  Except these are not predictions.  I'm not so foolish and my paycheck doesn't depend on it like it does for an investor.  Instead, I'll offer three potential Godzilla moments that I will be watching for in 2015, moments when something major gets wrecked, or, more accurately, causes a "discontinuity" in the normal flow of things. These are not in order of magnitude or importance.

The first likely origin of a Godzilla moment I've talked about plenty already is the ongoing shale oil bust in the U.S.  The falling price of oil is a disaster for these producers but the way it becomes our problem is through the financing of it.  This has been done by way of high risk debt, complicated hedging, speculative borrowing, and the creation of derivatives.  At the heart of it is a gigantic miscalculation of the return on these investments.  The collapse of the price of oil represented the Inconceivable for these people.  But alas.

The second ongoing event to watch for a potential discontinuity comes in the form of the finances of the nation responsible for the Godzilla myth.  Japan is leading the industrial world down the path to post-industrialism.  And by this I mean the failure of it, not the transcendence of it.  The thing to watch for is the success or failure (it won't succeed) of the gambit by Prime Minister Shinzo Abe in the attempt to jump start economic growth by flooding it with massive amounts of debt stimulus a la the Paul Krugman method.  Japan is at the outer edge of Keynesian style efforts to stimulate growth.

The last potential Godzilla moment begins sometime in the tomorrow range.  The election in Greece could bring in the SYRIZA party which threatens to default on it's loans to get out from under the austerity policy imposed on it by the EU.  Angela Merkel has stated publicly the willingness to let Greece leave the EU.  Nobody's sure where it will lead, but from my perspective, it raises the specter of miscalculation.  Is it possible to know the impact of the "Grexit" on financial markets?  Maybe.  But the prospect of miscalculation seems very likely to me.  And miscalculation rears it's ugly head in ways as diverse as warfare, auto purchasing, and polo matches.  The risk is there to ignite a calamitous feedback loop.

Extended Metaphor with a Musical Interlude

Seeing as it's playoff season in the NFL I thought I'd salute America's favorite sport by devising a metaphor based on the game.  In football, every game is a big game because they play so few, but imagine the biggest ever played. 

It is the end of the third quarter, and Team Human has the edge on its rival Team Nature, 50-2.  Team Human is feeling pretty confident having only given up a lone safety late in the third quarter, and despite the fact that the Humans were able to score only a field goal early in the third quarter, and a long one at that, Coach still thinks this one's in the bag. 

Team Nature's defense, based on the Laws of Thermodynamics, had all but shut down Team Human's offense.  The easy scoring of the first half turned to a sluggish, ineffectual and wearisome effort in the second, though it was not for a lack of trying.  If anything, Team Human had jacked up the effort because winning a big game decisively sends a message and bolsters confidence for the whole team.  But the coach secretly wished for the end of the game.  He saw how tired his players were compared to those of his opponent, and was even galled by Nature's unperturbed and nonchalant demeanor.  Team Nature seemed not to care about the outcome of the game, most galling of all.

Then something strange happened.  The start of the fourth quarter was delayed for some reason.  An animated discussion had erupted among the refs at mid field which lasted beyond the time allotted for the quarterly break.  Some refs were talking, others were rushing off field and rushing back to deliver messages to the other refs.  They looked at papers, listened to explanations.  As time went on the impatience of the crowd became audible as they began to boo, jeer, and to throw things.  Coach was getting impatient as well though, in a way, he welcomed the extra rest for his players.  Mostly he just wondered what the heck was going on.  Finally the head ref ran over to the sideline to talk to the coach of Team Human.

He was extremely apologetic, embarrassingly so, coach thought, but listened anyway.  "It seems there's been a mistake.  The game isn't actually heading into the fourth quarter, and the game has been going on for much longer than anybody thought."  He emitted a nervous laugh.  "Nobody knows how many quarters have been played, and there's some discussion about whether they should be called quarters, but all we can say, with only some certainty, is that this is the last quarter, or whatever you want to call it.  We shall see.  But, as a result of our findings, the score has changed and is now 247-53 in favor of Team Nature."

The coach didn't believe him at first.  He just stared at the ref with mouth agape and eyes that said "you are insane".  But anger quickly took the reigns as the stream of bad words flying from his mouth made evident.

"What do you mean the score has changed?" 

"Well, it changed.  See?  Look at the scoreboard.  It says 247-53.  We can't do anything about that."  Coach fumed but saw the ref was either truly powerless or too much of a wimp to do anything.  "So, uh, we're going to start the fourth quarter, or whatever."

The fans went crazy at the new information on the scoreboard.  They screamed at the refs, screamed at each other, screamed at the sky.  Everyone in the stands was rooting for Team Human and now they were all angry.  The players were utterly demoralized as the game resumed once it had dawned on them that revised score would stand.  They seemed even to have forgotten what they were out there to do.  Some were standing around.  Other players engaged in lengthy conversations with the players of Team Nature, would even physically embrace them.  Others fought and some laid down on the ground. 

The pep band made its own commentary on the new situation, too, with songs like this:

And even this:

Alas Poore Men

This was too much for the Cheerleaders who chided the band for their song selection.  "You're a pep band.  Be peppy!" they said to no effect.  Then they tried to blame the pep band for the altered score, still trying to grapple with what was to them a deeply unfair decision by the refs.  This tactic worked for only a little while and the pep band quickly resumed its dour statement.  Eventually, even the cheerleaders recognized that victory seemed impossible and interest in the game had dried up. 

The coach for Team Human halfheartedly tried to revive his players interest but quickly saw the futility of the attempt.  The clock ticked indifferently along and in a last gesture to change the course of things, he called a time out.   The refs seemed not to notice or care that he had done so.  So the coach resolved to sit down to think.  He had no control over his players anymore, and victory was out of the question.  Team Nature had won without caring.  He reflected on what had happened and had to admit a vague recollection of previous quarters having been played, but had believed somewhere along the line that only the last three quarters mattered and consequently forgot about the others.  He looked for a way out of this with some dignity still intact for himself and his team.  "Is this all there is?"  he thought.  What happened before the game?  Or after?  He decided that maybe what he needed was a different metaphor.

Original Virtue

In order to carve out an explanation for what is going on people will need to suspend their understanding of the past.  This involves suspending familiar narratives that seem to have worked in the past but no longer do.  I've talked about this in light of the assumptions made in our economic narratives but the sister discipline of ideology has formed narratives around the experience of industrial capitalism that needs to be pulled apart and looked at.  Eventually a new narrative has to be agreed upon and serve as the best description of how most people think about reality.  Like all good narratives, there needs to be an origin story, but this one must be based on some kind of demonstrable body of knowledge, even if is a necessarily incomplete one.

An article published recently by Kurt Cobb on Resilience.org provides an elegant pulling together of a lot of themes I talk about in this blog.  In Greed Explained:  J. Paul Getty, Aristotle, and the Maximum Power Principle, Cobb addresses the subject of Greed by placing it solidly into the natural order of things.  Greed is by definition a bad thing, one of the seven deadly sins that will only get you a one way ticket to Hell.  Of course, this is the Christian version of things, but something like that can be found in every major moral tradition, whether religious or philosophical, which is to say, the contemplative traditions.  But Cobb turns the notion of greed a bit on it's head by positing greed as a manifestation of the Maximum Power Principle which represents the original force for human survival and for all other living beings.

So whence all the religious prohibitions?  To use the seven deadly sins as a guide, of the seven, three of them, lust, gluttony and greed, are sins of excess.  Greed is an excessive desire for material things to the point where the soul is so tainted with sin it can only be sent to the Underworld.  So for them this was no small matter.  Excess, however, is a relative term co-defined alongside scarcity and any moral judgement taken on excess has to be seen in light of the competition for scarce resources as directed by the Maximum Power Principle.  It is, after all, the Prime Directive which cannot be denied.

Yet we humans still have this morality which has formed alongside the MPP.  Cobb says, as do others, morality is adaptive and serves a survival purpose as well, meaning that the outwardly foolish decision to voluntarily do with less actually enhances the prospect for survival.  This would have formed in the dimly lit past of the Stone Age, when the Earth's climate was tumultuous, so much so as to frequently reduce available resources to such a degree that it would cause death.  This can be seen in the climate record which shows that the climatic fluctuations were so severe that settled life in a large civilization wasn't possible.  It took at least 60,000 years, maybe more, for humans to take up agriculture, even though evidence suggests it was attempted well before it finally took hold some 8,000 years ago.  Human society and it's moral codes were formed by this experience of uncertainty and scarcity.  But so were our appetites.

And now our appetites appear to be out of bounds in regards to our available resources.  What has seemed normal and innocent is looking like excess.  The narratives which have evolved from both the perception and the actual fact of plenty are cleaving at the very point of perception and actuality.  How we behave at the dawn of a new era of scarcity is a serious issue.  We have this dual nature, or so it seems, where one aspect tries to temper the other, with mixed results.  Dealing with mixed results is nothing new to humanity, but to garner a sense of the transition from abundance to scarcity on a global scale is certainly new.  Humanity has never had to think on this scale, and only a few really ever try.  Only recently has thinking on a global scale even been necessary, let alone truly extending an innate capacity to empathize to all the other people living in all parts of the world.

The innateness and the institutions exist to make the attempt, and it will be made.  And much of it will be expressed through ideology.   Ideology is an instrument of societal organization.  People will organize themselves around values, beliefs, facts, convictions, and a healthy dose of incomplete or false information.  That is also the realm of the individual.  What I like so much about Cobb's thinking is that he is pointing to a conception of the origin of moral and sinful behavior that can be used as an instrument for self-reflection.  The questions of who we are and what are we doing still matter.  There is some new information here which can hopefully instill a sense of humility about the common enterprise.  And, to end on an uncharacteristically optimistic note, this humility may instill other forms of sense, like an unprecedented and heroic scale of global cooperation while the institutions to enable it still exist.