Wednesday, 27 January 2016

The Little Short

The Big Short trailer

Saw the big short yesterday evening. Interesting how long it takes for 'something' to go from 'reality' to the movies- basically in this case about eight years. (i.e. the time it takes for 'the public' to become aware of what is 'happening' at the present). 

I was fascinated by the big crash of 2008 (see a few posts at the time HERE). At the time I thought it was the beginning of a more sustainable future for Western societies, with at last ,a chance for the problem of biodiversity shrinkage to be addressed.  The collapse of global Capitalism had occurred so, I thought, it was now the chance for a sustainable system to take over. Well I was right and wrong- more than ever what emerged from the crash was the re-crystallisation of the great old divides, with two very traditional 'worlds' re-establishing themselves more acutely since the end of the world wars, one taking the form of a global neo-aristocracy and the other, largely a rabble of everyone else.

The 'Capitalists' (Fundamental Capitalists) 
The first of those worlds was the crystillization of a Super Elite Capitalist global society, so instead of Fundamental Capitalism (un-ethical as opposed to 'ethical-Capitalism') crashing and disappearing it actually emerged violently out of a cocoon into its finest hour with the last seven to eight years seeing one of the largest transfers of wealth from the poor to rich in the history of the planet (SEE HERE). We are now in an era of great austerity, inequality and environmental decline for large sectors of society within our own country and worse so in other parts of the world. Those deep divides are dangerous, with fault lines opening up and widening. In the process biodiversity and nature is also being carved up in the carnage (e.g development on nature protected habitat, pollution etc).

So how did a super elite Capitalist society emerge from a global crash of Capitalism? The answer is something which nobody could have predicted- the creation of the biggest scam ever-a combination of quantitative easing (HERE) and financial sector bail outs HERE. In other words printing money and inventing a form of socialism for bankers and the rich (a safety net for reckless risk takers, fraudsters and the greedy- a safety net paid for by tax payers). So in other words they are now untouchable- they can print as much money for themselves as they like and if anything goes wrong they will be bailed out by the governments that protect them (facilitators). They can in theory just keep creating bubbles and then crashing the economy- wave after wave of destruction for 'everyone else'.

Importantly part of that destruction is environmental and ecological and it is important to understand the connection between the health of the natural system and how the overall system works. Biodiversity indicators reflect the management of the system. If the  economic and social system is not functioning correctly, neither will the biological system. The management of biological systems requires a sound economic and social framework- an overall ethical framework that reflects a wide range of quality of life indicators. These indicators should govern system management- not simply capital indicators. The ideology of the Capitalist elitists is overall a human-centric ideology, where nature is a peripheral priority and the processing of nature into capital is a fundamental method for perpetuating capital growth.See below how biodiversity indicators reflect the failure of the 'system' to manage biodiversity.

Everyone Else (The Capitalist 'slaves' and the Resistance/Socio-environmentalists/Ethical Capitalists) 
The second of those worlds to emerge/become more polarised (granted that I'm using a simple narrative here to absorb the 'big middle') from the Big Crash was the beginnings of the 'everybody else' world- basically anybody who is not in this new global Fundamental Capitalist elite. Problem is there is a bit of catch for everybody else when it comes to quantitative easing, socialism for the rich and fundamental Capitalism for 'the poor'. To explain-here is what QE is:

Source BBC

The problem with QE is that money is being created that does not reflect the primary resources that money is in theory supposed to reflect. The money also goes to the financial institutions and not to the people and the low interests rates are not good for savings and are designed to encourage more borrowing, more debt - more of the same ingredients that caused the last big crash.  Market forces are supposed to reflect either scarcity (high price e.g. gold) or abundance (low price e.g. grass) so if you start printing money you start to loose the connection between the true value of resources, the prices wont reflect whether something is scarce or not, the market forces won't naturally select what is working and is not working. If market forces were left to do what they do best- then capitalism should have been left to fail and a sustainable society would have formed. The invisible hand of the market would have guided in the sustainable future (as Karl Marx had predicted a more social minded shift in Capitalism would occur organically)- Capitalism should have fallen victim to it's own philosophy. However that is not what happened- the 'Capitalists' protected themselves by creating a socialist state for themselves (so they are not really even 'Capitalists'- just Elitists). If you combine QE with a socialist state for the super rich you basically have a very toxic cocktail- a cocktail which is being served up to 'everybody else'. That cocktail is also a mix of fundamental capitalist forces for the under-privileged and poor- forces that the hypocritical Capitalists do not expose themselves too.  

As the transfer of wealth to the rich from the poor continues and as population continues to increase, quality of life indicators will continue to show worsening states- biodiversity will continue to decline, environmental conditions will decline further as resources are depleted more and more- the people outside the new castle of the super elite Capitalists and their instruments of power will start to live in increasingly toxic and hostile conditions. Slowly life expectancy will decrease, fertility will decrease, access to resources will become restricted and biodiversity will decrease. In effect those outside the castle will live in states of hopelessness and ill health and the 'Capitalists' will continue to profit from those swarms through tenancy, mass consumption, cheap labour, destroying biodiversity and treating their sicknesses for profit. Its basically a transfer of human well being and natural complexity into numbers on a computer screen- a transfer of governing code- that dictates how the system operates. Its replicating code from a central DNA blueprint that is fundamentally corrupted. 

However, it's not all good news for the 'Capitalists'. There is one thing that can counter the attempts of the 'Capitalists' to make everyone intoxicated on what they have to offer. That one thing is:

Personal Empowerment

Basically that means not letting the corrupted system get you and there are many ways of doing that. The main focus is to detach as much as possible from being dependent on the macro system of fundamental capitalism, disconnected as much as possible from the services and goods that centralised non-ethical Capitalism produces and to form independency in smaller autonomous groups or larger ethical corporations. That 'mutation' should develop a counter-stream (a new course) which will form a basic blueprint for the emerging post-growth society. So there's loads of options (basically anything you can think of that is inspiring and empowering to yourself and your 'group'). Here's ten ideas off the top of my head:

1. Self employment- providing de-centralised ethical services and products and creating financial self sufficiency. A franchise is a good half way house or even free lancing skills for ethical companies. 
2. Supporting small scale producers, especially local ones and supporting ethical businesses and products (generally the bigger and more centralised a business the less humane and intimate they are- networks, replicating models, businesses connected by ideology etc typically have more intimacy and personal involvement ) 
3. Forming trade networks (e.g. I'll buy from you, you buy from me), 
4. Avoiding personal debt as much as possible- debt is the great enslaver.Generating as much self sufficiency as possible (generate your own power, your own food, or connect to  autonomous networks that provide that)
5. Take positions of power in local society, favour local community and local community initiatives and block the central capitalists bastards :-). Politically important to have a more representative system too- a multi-party system appears to be emerging which could mean less influence from the Capitalists to one particular political party- but by that time central political power will be even less (the Capitalists are by-passing democracy- look at TTIP) and the importance of local political power would have grown. The DNA blueprint of the system needs to change and that will only come from a multi-pronged, multi fractal 'offensive' against the flow of those that are protecting the current blueprint that serves 'them' (the value system) well. 
6. Cause the 'Capitalists' and big business in your district as much trouble as possible if they are up to no good and do the best to try and make them see and act on their social and environmental responsibility (after all some of them are humane too). If they won't listen try and block everything they do in anyway possible and make sure you get away with it.
7. Form moneyless networks- I'll offer this service in exchange for that (stream lined transactions)
8. Stop buying excessively, concentrate on needs and comfort 
9. Start creating new habitats and managing spaces for wildlife and people, take ownership of the problem and create the solutions 
10. Start Birding! and doing other great fun and interesting creative stuff in all the free time that you'll have once you stop working for those bastards and start working for yourself and your group 

The Little Short
So why is this blog post called the Little Short?

Well, the Big short is all about 'big time bankers' who saw the financial crash coming and made a load of money from it. Well, they weren't the only ones to see the crash coming. The economy has various faces/sides/fractals to it. One of those fractals is the SMEs and micro business network and the people on the front line of that. That interface is also sensitive to the buzz, rhythms,creaks and rumbles of the economy and several people including myself saw the big crash coming and acted on it.  Ok I know bugger all about short selling of stocks, derivatives etc but as a simple mutt I did sell my property (encouraged by a change in circumstances) and went to live in a 'bunker' from 2007 and re-bought into the property market in 2009. So I was basically betting on the property market crashing. It did. I'm now mortgage free and basically semi-retired from having to earn money (plenty of more meaningful and rewarding work to do though (SEE HERE ).  Ethically- I did tell everyone else that would listen to do the same- so??

So with some kind of qualification- what's my prediction for the next few years. Well its both bleak and brilliant. On one hand the 'capitalists' will crystallize power and do their best to centralize capital, impoverish the hinterlands, create scarcity, more inequality, more disease and less nature. The 'Capitalists' can engineer crash after crash- each time transferring more and more wealth into their hands- each transfer means less nature and less equality. On the other hand the resistance to this horror will grow and a concurrent free society will emerge, not necessarily by challenging the power of the 'Capitalists'- that is largely fruitless unless involving mass participation (but good for exposing the threat they present) , by trying to work as well as possible within the limits set (even trying to find some kind of co-operation with large companies) and by developing ideas, technology and new models in the alternative free and sustainable society and taken on the personal responsibility to make the necessary changes and fill in the gaps that remain with the best fit solutions. It requires individuals to join that movement and detach from the negative influences of the 'Capital'.

This is a very simple synopsis of clearly a much more complex situation but its an attempt to highlight some of the main 'tectonic plates' moving around here. Its more about ideologies rather than groups of people or individuals. Those ideologies are fluid and permeate a material reality- things are not what they may seem. What I mean by that is you could find someone who is more genuinely environmentally conscious working in the banking sector than you might in conservation (and arguably could create more changes). The offensive I refer to here is an offensive on a way of thinking- fundamental capitalists do not necessarily live in mansions, do not drive big cars etc- probably most of them are in some of the most impoverished sectors of society (thats mainly where that way of thinking keeps a lot of them!). Environmentalists do not necessarily live in hobbit houses either. The material and structured world is largely irrelevant when it comes to ideas- well off and well connected people could be living in the slums- undercover. 

So the main thing is we have an ideological crisis and this really is no time to be complacent, apathetic or inactive- those bastards (the ideas) are tightening their grip- freedom always needs to be fought for. The socio-environmental movement have been calling on people to de-centralise and form symbiotic ethical networks for years (for decades). It has been happening and it is growing- but things need to escalate. The thing is now- it is either do it or die (rather slowly as environmental conditions get worse and everybody's health and well-being suffers even more). So what's my little short?- prepare for further decline, de-centralise, connect to the emerging networks (which ultimately will generate the return to a new prosperity- one that values nature and well-being more), don't wait eight years to find out what you've missed out, so in short- join the Resistance :-) 


DorsetDipper said...

I worked in banking until recently and remember well the pandemonium on the trading floor on August 9 2007 when BNP closed their hedge funds and the market collapsed. It felt like a trap door had opened under capital markets and prices were falling with little idea of where they would stop.

Many people had been pointing out that the buoyant state of the economy was a pyramid scheme based on an over-lent property market, but the vested interests (i.e. Governments) that benefited from the over-inflated economy had been supporting it over a number of years, and what you don't get in the book is the number of people who had lost money verifying Keynes' Maxim that the markets can remain irrational longer than you can stay solvent. Nevertheless on August 9 it became clear that the pyramid was crumbling, and it took over a year to find out exactly how much money governments were going to have to print to keep the show on the road.

As a book The Big Short , whilst taking place in the environment of the crash is not really about the crash. The book asks the question "what does it take to go against the conventional wisdom and stick to it?" A better book on the crash itself which fully explores the origins and reasons for the crash is "All The Devils are here" by Bethany Maclean and Joe Nocera. And the film "Margin Call" is an excellent drama giving the flavour of banks during the crash.

Peter Alfrey said...

Interesting 'the markets can remain irrational longer than you can stay solvent' - its like there's no warning system in place- the topple over the cliff just happens suddenly.

Will check out the Margin Call- sounds good!