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Edited on Tue Sep-23-08 11:32 PM by Kurt_and_Hunter
A serious global contraction would demolish several BILLION people. (There are many tendentious posts around here explaining how big a billion is. Just imagine a human being in place of a dollar bill.)
Seriously... Do you have any idea what happens to the billions of poor people in the world when global productivity ticks down a percent, let alone ticks down a LOT?
It makes the Iraq War look like a fucking picnic.
Money is not a zero-sum game. It's not like we have a pile of money to hoard. We live on debt and survive only on economic growth. If the international credit system freezes up there will be no money next year... not for bail-outs, health care, child care, medicine or any other purpose.
This is not to say the bail-out will work, or that it is the best possible solution. But it is what it is... a desperate stab at preventing the ruin of a generation of human beings. Not Americans... we will do better than most. Human beings.
And timeliness really does matter. If the crisis is real (which one can dispute) a week is a lifetime. Spin a quarter on your desktop. If you are really coordinated you can add little kicks to keep it spinning for a long time. But at some point it begins to wobble and then quickly reaches a point where it will go down... not right away, but inevitably. Once its movements become too eccentric you cannot kick it back up to a clean spin no matter what you do.
Some want to wait for the coin to fall and then re-spin it a different way. But there are real events along that path...
Mass starvation. A generation of children whose intellectual potential is limited by childhood malnutrition. Wars... wars over food, over water, over everything.
The folks who point out that international finance is a house of cards, that money is created through debt and that the whole racket is a pyramid scheme are right. So they should be the first to recognize what happens when the game of musical chairs stops suddenly.
There is, by definition, not enough money in the world to pay the interest on the world's debt. Two years of global 0% growth is a disaster. Two years of actual contraction... forget about it. Whole nations get foreclosed, not just some houses.
For the third world the situation is FAR more dire than the 1930s. Back then the world's destitute grew a lot of their own food. They didn't have sweat-shop jobs to suddenly lose. The modern third world dweller is now like the British working class in the 19th century at the worst of the industrial revolution. (And you can scarcely imagine a much more precarious human condition than that faced by the 19th century British working class.)
The profound problems with the international financial system must be unwound through a generation of careful reform. We can no more collapse our way to prosperity than we can bomb countries into democracy.
And as to the argument, "it will happen eventually anyway." Well, maybe so. But what if someone develops cold fusion or a room temperature super-conductor five years from now? (unlikely but not inconceivable) Free power forever! It would reshape the entire global system overnight. So there is much to be said for limping along starving as few people as we can manage while working on solutions.
And as to politics... there is no socialist impulse in America. Our response to crisis will be fascism, not eternal coolness. If the system goes down Obama will be succeeded by Sarah Palin or someone worse.
---End Rant---
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