I think that, in order to understand the ramifications of the current financial crisis, we should look at a much larger picture: liquidity, credit etc and their current functions. this broader outlook might also explain, why the US system didnt collapse as yet and what might happen in our future.
right now, we have tremendous global trade, at least 80% of which is in the dollar zone. this means that the currency of a single country was used to pay for most of the global trade. however, the latter is much bigger than the former, which creates such insane numbers as $60 trillion etc, supported in fact by the 80+% of goods produced in the world, which are totally out of the US control. for a time, the dollar worked in the quality of the Petrodollar, created by an agreement between Reagan and the Saudis. then, the need in collateral was covered by the so called Internet bubble. When it, in its turn, also exploded, the need in collateral had to be covered by something else. Since nothing on this scale could be found in the US, that meant the need in creating “smoke and mirrors”, with collateral, which amplified itself after going through middlemen, the more the merrier. welcome, the housing bubble and the related SIVs, CDOs, credit swaps etc, which built $60 trillion of “value” on basically such a shaky foundation as the US housing market. this shows the systemic vulnerability of the globalization, based on unequal exchange between the sides.
however, i wouldn’t be looking for an evil intent. even though greed indeed run high as it often does, this seems to be a systemic feature experienced at this time of the lifecycle by many of the earlier globalizing empires. for example, Britain used to control most of the world trade, not allowing, for example, sales of goods with defense potential (including rubber) to such countries as the US or Germany. in 1913 however its bank assets were dwarfed by what was contained in banks of Germany. it would take three decades between two world wars and including the Great depression to get from the end of coal era, dominated by Britain, anf the start of the oil era, which would, in the future, be dominated by the US. Britain, of course, would be totally dwarfed in comparison to the US, while the shift also changed practically every facet of life.
In my works, I show that a technological, social, financial etc shift of even greater magnitude may be waiting in our future, as the US-style, oil-based economy fails in fulfilling the needs of the rapidly globalizing world, which is already much greater than it can be reasonably controlled from the US.
if you want to learn more e-mail me at 4112lucy@gmail.com.
