I posted this in January of this year - I think that in the next few weeks we will see "Capitulation" the giving up of hope.
When will the crisis be over? I spent a lot of time with my Uncle
Robert last week who is nearly 80 and was and is a genuine expert in
the markets who grew up in the depression and was an architect and
builder of much of the system we live in today.
His advice "Look for 'Capitulation'" Capitulation is what we see in
the picture above. Thousands of men who had been fighting all out to
defend their country walking home without guards. Capitulation is is
when all hope is passed and all resistance is seen as being futile.
We will know the bottom when all hope is lost and we seem to have
lost everything. The good news, yes there is good news even here, is
that from the ashes rises a better place as it did in Germany. The
lesson will have been learned.
So what will the lesson have to be? You cannot sacrifice the place
that you live in for the idea of global markets. People live near you
in your place. They and this place have to be in good shape. Your
people and your place have to be your priority. If they have nothing
and are noting - you have nothing and you are nothing.
Our lesson is that we have given up this core principle for life for
an abstract idea of global markets that are somehow meant to help us
all. But we are finding that it only helps a handful of people.
1. In the search for cheap stuff/food we no longer have jobs at home
in manufacturing or on farms that will feed a family. To have cheap
stuff and food - we have created a vast underclass who have no way of
making a decent wage. We have then given them cheap credit and high
expectations.
2. All the money now made from the stuff buy and the cars we drive
goes to the oil producers and the new manufacturers - they have to get
a return on this vast ocean of cash and this cash at first was put back
into the banking system
3. The banks lent this Tsunami of cash to people who should never
borrow - the very people that have had their jobs and the hope of jobs
taken away from them. We deluded ourselves in doing this by using
financial engineering. We have taken financial engineering too far and
deluded ourselves that we could lend vast sums to this underclass and
get away with it.
So now we pay the piper.
The American underclass - created by getting rid of their jobs - is
now in even worse trouble than can be imagined as is our financial
system.
Tax breaks and cheap credit mean nothing to those that have no income or access to credit.
Sorting out banks who cannot find title to their assets because title is so confused by the engineering is next to impossible.
So what to do?
The issue is the flows. (by Greg Palast)
We have to take back our manufacturing jobs. We have to take back
making and marketing our food locally. We have to reduce our need for
oil.
Ah but that means the end of globalization? Ask who has gained from
it? India now has more billionaires than the US but it too has an even
larger underclass than before.
I think that history will tell us that Globalization has benefited
only a very small group and has impoverished more - and its impact on
the environment will impoverish yet more as the real costs, to
ecosystems and to water, finally come home. For it is not just the
workers in the west who are exposed. What will China be like in 20
years time if they continue on their current path? What will India be
like if Wal-Mart take over the food distribution system?
If I became the new president or the new premier of PEI, I would
make my first priority - Energy Independence and Food Security. From
that would come not only a shift in the Flows but as important millions
of new real jobs. Much of the work will be in the new local food and
energy sectors.
In 1918, Germany did not learn the lesson and we all had to go
through round II. In 1945, they did. By 1955 Germany was on a roll.
I don't think we can prevent the collapse that is coming. But we can
work hard to make sure that we learn the lesson. Then we can offer our
children hope.
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